^ 


ATTORNEY-AT-LAV;, 

Room  619  Ashland  Block, 

CHiCACO.  ILL. 


ILLINOIS    STATUTES 


Hi 

AND 


ILLUSTRATIVE  CASES 


ON 


BILLS  AND  NOTES 


TO   BE   USED    IN   THE   CHICAGO   COLLEGE    OF   LAW,    LAW   DE- 
PARTMENT   OF    LAKE    FOREST    UNIVERSITY,    IN    CON- 
NECTION  WITH   NORTON   ON   BILLS  AND   NOTES 


St.  Paul,  Mlw. 
WEST  PUBLISHING  CO. 

1898 


T 


CorvHioHT,  18ft8, 

II V 

'VN'EST  PUBLISHING  COMPANY. 


> 


TABLE   OF   CONTENTS. 


v/l.  NEGOTIABLE  INSTRUMENTS. 
Illinois  Statute.  (Page  8.) 

y^.  HISTORY  OF  NEGOTIABLE  INSTRUMENTS. 
Goodwin  v.  Robarts.  (Page  9.) 

•^.  PROMISSORY    NOTE    MUST     BE     PAYABLE     ABSOLUTELY, 
AND  DEPEND  ON  NO  CONTINGENCY,  TO  BE  NEGOTIABLE. 

Hopkins  v.  Van  Zandt.  (Page  17.) 

^4.  NOTE— DEFINITION— ATTORNEY'S  FEES. 

Dorsey  v.  Wolff.  (Page  20.; 

Provision  for  an  attornoy's  fee  in  iiotf  does  not  u-nder  the  transaction  usnri- 
ons. 

I'rovlsion  for  attorney's  fees,  if  not  ])aid  when  due,  in  note,  does  not  destroy 
its  negotiability. 

Promissory  note  in  general  terms  may  be  defined  to  be  a  written  jtromise  by 
one  per.son  to  pay  to  another  person  therein  named,  or  order,  a  tixed  snm  of 
money  at  all  events,  and  at  a  time  specified  therein,  or  at  a  time  wliieh  mnsr 
certainly  arrive.  A  note  is  none  the  less  negotial)le  becanse  it  is  made  payable 
on  or  before  a  named  date. 


4. 


.  NOTE— INDORSER— GUARANTOR— PRESUMPTION  OF  LAW. 
Milligan  v.  Holbrook.   (Page  25.) 

Tlie  presumption  of  law  is  that  the  liability  of  a  person  signing  his  name 
on  tlie  back  of  a  note  is  tliat  of  a  guarantor.  When  note  is  still  in  the  hands 
of  i^ayee,  Ihat  presumption  may  be  rebutted. 

C  NOTE— DONOR  TO  DONEE— DELIVERY. 

School  Dist.  of  City  of  Kansas  City  v.  Stocking*.  (Page  26.) 

1.  The  note  of  a  donor  to  a  donee  is  not  the  subjeei  of  a  gift. 

2.  The  incuiTJug  of  expense  in  furflierance  of  enterprise  which  the  donor  in- 
tended to  promote  will  estop  his  executors  to  plead  a  want  of  consideration  for 
promise  contained  in  a  promissory  note. 

3.  Notes  ))laced  by  the  maker  in  the  hands  of  another  person,  with  direction 
to  hand  tliem.  wlien  called  for.  to  the  party  made  payable,  are  sntticiently  de- 
livered. 

7.  MORTGAGE  NOTE— ASSIGNEE— EQUITIES. 
Buehler  v.  McCormick.  (Page  ol.) 

The  fact  that  mortgage  secures  payment  of  note  "to  the  legal  holder"  does 
not  make  it  n(>gotial)lo. 

Payment  to  legal  holder  of  promissory  note  secured  by  trust  deed,  before 
maturity,  without  indorsement  or  surrender  of  note  and  trust  deed,  while  not 
a  defense  to  an  action  on  the  note  by  a  subsetiueut  innocent  holder  before  ma- 
turity, is  a  good  defense  to  an  action  by  the  latter  to  foreclose  the  mortgage. 
BARR.B.&N.  (ui) 


TAlihE  OF  CONTENTS. 

8.  CHECKS— ACCEPTANCE— INDORSEMENT. 

Coaiinercial  Nat.  Bank  of  Chicago  v.  Lincoln  Fuel  Co.  (Page  33.) 

l'ri>suiu|itiou  regarding  authority  of  a  stranger  to  a  check  to  indorse  the  same 
for  the  payee. 

WUM  constitutes  sufficient  proof  of  an  acceptance  of  a  check  by  a  bank. 

.Vrtitiavit  (h-nylng  tlu-  genuineness  of  an  indorsement  to  a  check  may  be  filed 
after  evidence  is  dosed,  wlien  for  the  first  time  urged  as  an  objection  to  a 
finding  in  favor  of  alleged  Indorsee. 

9.  CERTIFYING    BANK    CHECKS— RIGHTS    OF    HOLDER— LIA- 

BILITY OF  BANK  AND  DRAWER. 

Metropolitan  Nat.  Bank  of  Cliicago  v.  Jones.  (Page  o4.) 

If  the  holder  of  a  bank  check,  instead  of  demanding  its  payment,  has  it  certi- 
fied by  the  bank,  he  thereby  releases  the  drawer  from  liability  thereon.  The 
ruli>  is  different  when  the  drawer  procures  the  eertification  of  his  check  before 
It  is  delivered  to  the  drawee.  In  that  case  the  drawer  will  be  liable  for  non- 
payment on  presentation. 


CASES  REPORTED. 


Page 
tfuehler  ▼.  McCormick  (48  N.  E.  287,  1G9 
111.  269)    31 


Commorcial  Nat.  Bank  of  Chicago  v.  Lin- 
coln Fuel  Co.  (()7  111.  App.  16G) 33 

Dorsey  v.  Wolff  (32  N.  E.  495,  142  111.  589)  20 

Goodwin  v.  Robarts  (L.  R.  10  Exch.  337) .  .       9 

Hopkins  v.  Van  Zandt  (40  111.  App.  635). . .  17 

BARR.B.&  N.  (v)1 


Page 

M(>tropolitan  Nat.  Bank  v.  Jones  (27  N.  E. 

533.  137  ill.  (►:'.4) 34 

Milli>:an   v.    Holbrook  (48  N.   E.   157,   168 

111.  :',4.3)   25 

School  Dist.  of  City  of  Kansas  City  v.  Stock- 
ing (40  S.  W.  r,56) 26 


Wolff  V.  Doisey  (38  111.  App.  305j. 


20 


ILLINOIS  STATUTES 


ON 


BILLS  AND  NOTES. 


BARR.B.A  N.  (1)* 


ILLINOIS  STATUTES  OX  BILLS  AND  NOTES. 


Section. 

1.  Damages  on  foreign  bills  protested. 

2.  Damages  on  domestic  bills  protested. 

3.  Effect  of  notes,  etc. 

4.  Notes,  etc.,  assignable  by  indorsement, 

5.  Suit  by  assignee. 

6.  Payment  after  notice  of  assignment. 

7.  Kiglits  of  holders— Liability  of  assignor. 

7a.  All  persons  liable  may  be  sued  in  one  action. 

7b.  How  judgment  shall  be  entered. 

7c.  When  drawer  or  indorser  pays  judgment- 
Proceedings  as  to  others. 

7d.  Proceedings  when  all  the  defendants  have  not 
been  served. 


Section. 

8.  Notes,  etc.,  payable  to  bearer. 

9.  Failure  of  consideration. 

10.  Fraud. 

11.  Defense. 

12.  Set-off. 

13.  Payments  before  assignment. 

14.  I>ost  instruments. 
1.5.  Days  of  grace. 

16.  Time. 

17.  Holidays — Maturity  of  negotiable  paper. 

18.  Check,  etc.,   for  labor  payable   in   bankable 

currency — Penalty. 


Hurd'8  Revised  Statutes  of  Illinois,  Chap.  98,  p 

AN  ACT  to  revise  the  law  in  relation  to 
promissory  notes,  bonds,  due  bills  and  oth- 
er instruments  in  writing.  (Approved 
March  18,  1874.     In  force  July  1,  1874.) 

k1  (DAMAGES  ON  FOREIGN  BILLS 
PROTESTED.)  Par.  1.  Be  it  enacted  by  the 
people  of  the  state  of  Illinois,  represented 
in  the  general  assembly,  that  whenever  any 
bill^_oX_ex_Qhauge,  drawn  or  indorsed  within 
this  state,  and  payable  without  the  limits 
of  the  United  States,  is  duly  proteaied  for 
non-acceptance  or  non-payment,  the  di-awer 
or  indorser  thereof,  due  notice  being  given 
of  such  non-acceptance  or  non-payment, 
shall  pny  p^id  bill,  with  legal  interest  from 
the  time  such  bill  ought  to  have  been  paid, 
until  paid,  and  tea  per  cent,  damages  in  ad- 
dition, together  witli  the  costs  and  charges 
pf  protest.         /^ 

iA.  (DAMAGES  ON  DOMESTIC  BILLS 
PROTESTED.)  Par.  2.  If  any  bill  of  ex- 
change drawn  upon  any  person  or  body  pol- 
itic or  corporate,  out  of  this  state,  but  with- 
in the  United  States  or  their  territories,  for 
the  payment  ojt.  money,  shall  be  duly  pre- 
senteJT  for  acceptance  or  payment  and  prp- 
tested  for  non-acceptance  or  non-payment, 
the  drawer  or  indorser  thereof,  due  fljoiicu 
being  given  of  such  non-acceptance  or  non- 
payment, shall  ]2ay_  said  bill,  with  legal  in- 
terest from  the  time  such  bill  ought  to  have 
been  paid,  until  paid,  together  with  costs 
and  charges  of  protest,  and  in  ca.se  suit  has 
to  bebrought  on  such  bill  of  exchange,  &Ye 
per^cent.  damages  in  addition. 

^.  (EFFECT  OF  NOTES,  ETC.)  Par.  3. 
All  promissory  notes,  bonds,  due  bills  and 
other  instruments  in  writing,  made  or  to  be 
Tuade,  by  any  person,  body  politic  or  corpo- 
rate, whereby  such  person  promises  or 
agrees  to  pay  any  sum  of  money  or  articles 
of  £ei-sonal  properti%  or  any  sum  of  money 
In  personal  property,  or  acknowledges  any 
sum  of  money  or  article  of  personal  prop- 
erty to  be  due  to  any  other  pei;son,  shall  be 
taken  to  be  due  and  payable,  and  the  sum 
of  money  or  article  of  personal  property 
therein  mentioned  shall,  by  virtue  thereof, 
be  due  and  payable  as  therein  expressed. 

V4.  (NOTES,  ETC.,  ASSIGNABLE  BY  IN- 
DORSEMENT.) Par.  4.  Any  such  note, 
bond,  bill,  or  other  Instrument  in   writing, 


.  1107:  2  Starr  &  C  Statutes,  Chap.  98,  p.  2780. 

made  payable  to  any  person  named  as  payee 
therein,  shall  be  assignable,  by  indorsement 
thereon,  under  the  hand  of  such  person,  and 
of  his  assignees,  in  the  same  manner  as  bills 
of  exchange  are,  so  as  absolutely  to  transfer 
and  vest  the  property  thereof  in  each  and 
every  assignee  successively. 

V6.  (SUIT  BY  ASSIGNEE.)  Par.  5.  Any 
assignee  to  whom  such  sum  of  money  or 
personal  property  is,  by  such  indorsement  or 
indorsements,  made  paj'able,  qx,  in  case  of 
the  death  of  such  assignee,  his  executor  or 
administrator,  may,  in  his  own  name,  insti- 
tute  and  maintain  the  same  kind  of  action 
for  the  recovery  thereof,  against  the  person 
who  made  and  exocutecf  any  such  note, 
bond,  bill  or  other  instrument  in  writing,  or 
jVgainst  his  hojrs,  executors  or  administra- 
tors, as  might  have  been  maintained  against 
him  by  the  obligee  or  payee,  in  case  the 
same  had  not  been  assigned;  and  in  every 
such  action,  in  which  judgment  shall  be  giv- 
en for  the  plaintiff,  he  shall  recover  his 
damages  and  costs  of  suit,  as  in  other  cases. 

y^  (PAYMENT  AFTER  NOTICE  OF  AS- 
SIGNMENT.) Par.  6.  No  maker  of  any 
such  note,  bond,  bill,  or  other  instrument 
in  writing,  or  other  person  liable  thereon, 
shall  be  allowed  to  allege  payment  to  the 
payee,  made  after  notice  of  assignment,  as 
a  defense  against  the  assignee. 

y^7.  (RIGHTS  OF  HOLDERS— LIABILITY 
OF  ASSIGNOR.)  Par.  1.  The  rights  of  the 
laM'ful  holders  of  promissory  notes  payable 
in  money  and  the  liability  of  all  parties  to 
or  upon  said  notes  shall  be  the  same_a§  that 
of  like  parties  to  inland  bills  of  exchange 
according  to  the  custom  of  merchants.  Ev- 
ery assignor  of  every  other  note,  bond,  bill 
or  other  instrumennn''\\'Titing  mentioned  In 
section  III  of  this  act  shall  be  liable  to  the 
action  of  the  assignee  or  lawful  holder  there- 
of, if  such  assignee  or  lawful  holder  shall 
have  used  due  diligence  by  the  institution 
and  prosecution  of  a  suit  against  l[he  maker 
l[hereof,  for  the  recovery  of  the  money  or 
property  due  thereon,  or  damages  in  lieu 
thereof.  But  if  the  institution  of  such  suit 
would  have  been  unavailing,  or  the  maEer" 
had  absconded  or  resided  without  or  had 
left  the  state  \vhen  such  instrument  became 
due,   such  assignee  or  holder   may   recover 


ILLINOIS  STATUTES  ON  BILLS  AND  NOTES. 


a>;jilnst  tho  nssiyuor  as  if  due  diligence  by 
siiit  had  l)«HMi  iisod. 

V  7n.  (ALL  rEUSONS  LLVKLE  MAY  BE 
SUED  IN  ONE  ACTION.)  Par.  2.  Persons 
severally  liaMe  upou  bills  of  exchange  or 
promissory  notes,  payable  in  money,  may  all 
or  any  of  them  sev»'rally  be  Included  in  the 
same  suit  at  the  option  of  the  plaintiff,  and 
judgment  rendered  in  said  suit  shall  be  with- 
out prejudice  to  the  rights  of  tlie  several  de- 
feuj^aub$  as  between  themselves. 

»^.  (HOW  JI'IXJMENT  SHALL  BE  EN- 
TERED.) Par.  3.  In  any  suit  mentioned  in 
the  p^eet^ling  section  a  jjeparate  judgment 
may  be  entereil  by  default  against  any  de- 
fendant or  defendants  severally  liable  who 
have  been  duly  served  with  summons,  and 
against  whom  the  plaintiff  wotild  have  been 
entitled  to  judgment  had  the  suit  been 
against  su<-h  defendant  or  defendants  only. 
The  suit  shall  thereby  be  severed,  and  shall 
proceed  to  trial  against  the  other  party  or 
parties  in  the  same  manner  as  if  it  had  been 
commenced  against  such  other  party  or  par- 
ties only,  and  if  the  plaintiff  recover,  judg- 
ment shall  be  entered  against  such  one  or 
more  of  the  defendants  as  are  found  liable 
to  him.  but  in  no  event  shall  the  plaintiff  be 
entitled  to  more  than  one  satisfaction. 

\/!c.  (WHEN  DltAWER  OK  ENDORSER 
PAYS  .lUDtniENT-PROCEEDINGS  AS 
TO  OTHERS.)  Par.  4.  Whenever  the  draw- 
er or  endorser  of  an  accepted  bill  ot  ex- 
change or  the  endorser  or  guarantor  of  a 
promissory  note  shall  have  been  joined  with 
the  acceptor  of  said  bill  or  the  maker  of  said 
note  in  a  suit  to  enforce  the  collection  there- 
of, and  judgment  has  been  recovered  against 
any  such  drawer,  endorser  or  guarantor  who 
shall  thereafter  pay  the  same,  the  person  so 
paying  shall  be  entitled  to  have  the  judg- 
ment released  as  to  him.  but  the  same  sliall, 
at  his  option,  stand  and  may  be  enforced 
by  execution  under  the  order  of  the  court 
against  any  other  party  thereto  who  remains 
liable  to  the  party  paying  as  upon  said  bill 
or  note,  for  the  reimbnrsement  of  the  party 
so  paying.  If  there  be  any  contest  as  to 
such  liability  the  court  may  order  an  issue 
to  be  made  nj)  between  the  contesting  par- 
ties, which  sliall  be  summarily  determined 
as  the  court  may  direct. 

»^7d.  (PROCEEDINtJS  WHEN  ALL  THE 
I>EFENDANTS  HAVE  NOT  BEEN  SERV- 
ED.) Par.  5.  In  all  suits  on  negotiable  in- 
struments where  any  of  the  defendants  are 
jointly  liable,  and  only  one  or  more,  but  not 
all  of  them  have  been  served  with  summons, 
if  Uie  plaintiff  recover,  judgment  shall  be  en- 
tered in  form  against  all  the  defendants  so 
jointly  liable,  but  so  far  only  as  that  it  may 
be  enforced  against  the  joint  property  uf  ail 
and  the  separate  property  of  the  defendants 
served. 

V  8.  (NOTES.  ETC..  PAYABLE  TO  BEAR- 
ER.)   Par.  8.  Any  note,  bond,  bill  or  other  m- 


strumeut  in  writing,  made  gaj'able  to  bearer, 
may  be  transferred  by  deliveiy  thereof,  ajid 
an  action  may  be  maintained  thereon  in  the 
name  of  the  holder  thereof.  Every  indorser  of 
any  in.stniment  mentioned  in  this  section  shall 
De  held  as  a  guarantor  of  payment  unless  oth- 
erwise expressed  in  the  indorsement.   ' 

9.  (FAILURE  OF  CONSIDERATION.) 
Par.  9.  In  any  action  upon  a  note,  bond,  bill, 
or  other  instrument  in  writing,  for  the  pay- 
ment of  money  or  property,  or  tlie  performance 
of  covenants  or  conditions,  if  such  instrument 
was  made  or  enteretl  into  without  a  good  and 
valuable  consideration,  or  if  the  consideration 
upon  wliich  it  was  made  or  entered  into  has 
wholly  or  in  part  failed,  it  shall  be  lawful  for 
the  defendiint  to  plead  such  want  of  considera- 
tion, or  that  the  consideration  has  "gholly  or 
in  part  failed;  and  if  it  shall  appear  that  such 
instrument  was  .'aade  or  entered  into  without 
a  good  or  valuable  consideration,  or  that  the 
consideration  has  wholly  failed,  the  verdict 
shall  be  for  the  defendant;  and  if  it  shall  ap- 
pear that  the  consideration  has  failed  in  part, 
the  plaintiff  shall  recover  according  to  the  eq- 
uity of  the  case:  provided,  tliat  nothing  in 
this  .section  contained  shall  be  construed  to  af- 
fect or  impair  the  right  of  any  bona  fide  as- 
signee of  any  instrument  made  assignable  by 
tills  act,  when  such  assignment  was  made  be- 
fore such  instnuiient  became  due. 

-10.  (FRAUD.)  Par.  10.  If  any  ^aud  or  cir- 
cumvention be  used  in  obtaining  the  making  or 
executing  of  any  of  the  instruments  aforesaid, 
such  fraud  or  circumvention  may  be  pleaded  in 
bar  to  any  action  to  be  brought  on  any  sucii 
instrument  so  obtained,  whether  such  action  bc^ 
brought  by  the  party  committing  such  fraud  or 
circumvention,  or  any  assignee  of  such  instru- 
ment. 

11.  (DEFENSE.)  Par.  11.  If  any  such  note, 
bond,  bill  or  other  instrument  in  writing  shall 
be  indorsed  after  the  same  becomes  due,  and 
any  indorsee  shall  institute  an  action  thereon 
agalns'f  tlie  luaker  of  the  same,  the  defendant 
being  maker  .sh.iil  be  allowed  to  set  up  th<^ 
same  deiease  that  he  might  have  done  had  the 
action  been  instituted  in  the  name  and  for  the 
use  of  tlie  person  to  whom  such  instrument 
was  originally  made  payable,  or  any  intermit 
diate  holder. 

.  12.  (SET-OFF.)  Par.  12.  In  any  acUon  up- 
on a  note,  bond,  bill,  or  other  instrument  in 
writing,  whicli  has  been  a.ssigned  to  or  tran.s- 
ferred  by  deliverj'  to  the  plaintiff  after  it  be- 
came due,  a  set-off  to  the  amount  of  tlie  plain- 
tiff's debt  may  be  made  of  a  demand  existing 
against  any  person  or  pei-sons  who  shall  have 
assigned  or  transferred  such  instrument  after 
it  became  due,  if  the  demand  be  such  as  might 
\m\e  been  set-off  against  the  assignor,  while 
the  note  or  bill  belonged  to  him. 

13.  (PAYMENTS  BEFORE  ASSIGNMENT.) 
Par.  13.  If  any  such  note,  bond,  bill,  or  other 
instrument  of  writing,  shall  be  assigned  before 
tlie  day  the  money  or  property  therein  mention- 


ILLINOIS  STATUTES  ON  BILLS  AND  NOTES. 


ed  becomes  due  and  payable,  and  the  assignee 
shall  institute"an  action  thereon,  the  defendant 
may  give  in  evidence  at  the  trial  a.py  money  or 
property  actually  paid_  on  the  said  note,  bond, 
bill,  or  other  instrument  in  writing,  before  the 
said  note,  bond,  bill,  or  other  instrument  in 
writing  was  assigned  to  the  plaintiff,  on  prov_- 
ing  that  the  plaintiff  had  sufficient  notice  of 
the  said  payment  before  he  accepted  or  veceiv- 
ed  such  assignment. 

^4.  (LOST  INSTRUMENTS.)  Par.  14.  In 
any  action  founded  upon  any  note,  bond,  Ijill, 
or  other  instrument  in  writing,  "oFTn  which  the 
same,  if  produced,  might  be  allowed  as  a  set- 
off in  defense,  if  it  shall  appear  that  such  in- 
strument was  lost  while  belonging  to  the  party 
claiming  the  ambimt  due  thereon,  to  entitle 
him  to  recover  upon  or  set-off  the  same,  lie 
may,  in  the  discretion  of  the  court,  be  required 
to  execute  a  bond  to  the  adverse  party  in  a 
penalty  at  least  double  the  amount  of  such 
note,  bill  or  instrument,  with  sufficient  security, 
to  be  approved  by  the  court  in  which  the  ac- 
tion is  pending,  conditioned  to  indemnify  the 
adverse  party,  his  heirs,  executors  and  admin- 
istrators, against  all  claims  by  any  other  per- 
son on  account  of  sucli  iiLstnament,  and  against 
all  cost  and  expenses  by  reason  thereof.  L  ^.,  7 

;  15.  (DAYS  OF  GRACE.)  Par.  15.  No  prom- 
issory note,  cheque,  draft,  bill  of  exchange,  or- 
der or  other  negotiable  or  commercial  instru- 
ment, shall  be  entitled  to  days  of  grace,  but 
shall  be  absolutely  paj'able  at  maturity.  (As 
amended  by  act  approved  June  4,  1895.  In 
force  July  1,  18f>5.) 

L^6.  (TIME.)  Par.  16.  In  all  computations  of 
time,  and  of  interest  and  discounts,  a  month 
shall  be  considered  to  mean  a  calendar  month, 
and  a  year  shall  consist  of  twelve  calendar 
months;  and  in  computations  of  interest  or  dis- 
counts for  any  number  of  days  less  than  a 
month,  a  day  shall  ue  considered  a. thirtieth 
part  of  a  month,  and  interest  or  discoimts 
shall  be  computed  for  such  fractional  parts  of 
a  month  upon  the  ratio  which  such  number  of 
days  shall  bear  to  thirty. 

^  17.  (HOLIDAYS-MATURITY  OF  NEGO- 
TIABLE PAPER.)  Par.  17.  The  following 
days,  to-wit:  The  first  cliiy  of  January,  com- 
monly called  New  Years  Day,  the  twenty-sec- 
ond day  of  February,  the  thirtieth  day  of  May, 


the  fourih^.day  of  July,  the  twenty-fifth  day 
of  December,  commonly  called  Christmas 
Day,  the  first  Monday  in  September,  to  be 
known  as  Latter  Day,  the  twelfth  day  of  Feb- 
ruary and  any  day  appointed  or  recommended 
"by  the  governor  of  this  state  or  by  the  presi- 
dent of  the  United  States,  as  a  day  of  fast  or 
thanksgiving,  are  hereby  declared  to  be  legal^ 
holidays,  and  shall  for  all  purposes  whatsoever 
as  regards  the  presenting  for  payment  or  ac- 
ceptance, the  maturity  and  protesting  and  giv- 
ing notice  of  the  dishonor  of  bills  of  exchange, 
bank  checlcs  and  promissory  notes  or  other  ne- 
gotiable or  commercial  paper  or  instruments 
be  treated  and  considered  as  is  the  first  day 
of  the  week,  commonly  called  Sunday.  When 
any  such  liolidays  fall  upon  Sunday,  the  Mon- 
day next  f  olio  wing  sliall.Jjg  held  and  consider- 
ed such  holiday.  All  notes,  bills,  drafts,  checks 
or  otlier  evidence  of  indebtedness,  falling  dua 
or  maturing  on  either  of  said  days,  shall  be 
deemed  as  due  or  maturing  on  the  day  follow- 
ing, and  when  two  (2)  or  more  of  these  days 
come  together,  or  immediately  succeeding  each 
otlier,  then  such  instruments,  paper  or  indebt- 
edness sliall  be  deemed  as  due  or  having  ma- 
tured on  the  day  following  the  last  of  such 
days.  (As  amended  by  act  approved  June  4, 
1895.    In  force  July  1,  1895.) 

Dl^BTS  CONTRACTFD  FOR  LABOR 
PAYABLE  IN  BANKABLE  CUR- 
RENCY. 

AN  ACT  to  prevent  extortion  and  compel  the 
payment  of  debts  contracted  for  labor  in 
bankable  currency.  (Approved  June  21,  1895. 
In  force  July  1,  1895.) 

'As.  (CHECK,  ETC.,  FOR  LABOR  PAYA- 
BLE IN  BANKABLE  CURRENCY.)  Par.  1. 
Be  it  enacted  by  the  people  of  the  state  of  Illi- 
nois, represented  in  the  general  assembly,  that 
any  time  check  or  store  order,  issued  or  given 
as  cohapensation  for  labor  performed,  shall  be 
redeemable  at  the  option  of  the  person  to 
whom  the  same  was  Lssued  or  given,  or  upon 
his  written  order,  in  banlcable  cun-ency.  Any 
person  who  violates  tliis  act  shall  be  deemed 
guilty  of  a  misdemeanor,  and  shall  be  punished 
by  a  tine  not  to  exceed  one  hundred  (100)  dol- 
lars or  confined  in  the  county  jail  not  to  exceed 
thirty  (30)  days,  or  both,  in  the  discretion  of 
the  court. 


lb 


ILLUSTRATIVE   CASES 


ON 


BILLS  AND  NOTES. 


BABB.B.&N.  (7)4 


HISTORY  OF  NEGOTIABLE  INSTRUMENTS. 


GOODWIN  V.  ROBARTS  et  al. 

(L.  R.  10  Exch.  337.) 
Court  of  Exchequer.    July  7,  1875. 

Error  by  the  defendants  on  a  judgment  of 
the  court  of  exchequer  in  favor  of  the  plain- 
tiff. 

The  material  facts  are  stated  in  the  opinion 
of  the  court. 

Mr.  Batten,  for  plaintiff  in  error.  Mr.  Mac- 
kenzie, for  defendants  in  error. 

COCKBURN,  C.  J.  The  question  for  our 
decision  in  this  ease  is  whether  certain  scrip 
issued  by  the  authority  of  the  Russiau"j|of^ 
ernmenf,  and  certain  other  scrip  issued  by 
the  authority  of  the  Austro-Hungarian  gov- 
ernment, is  a  negotiable  siiuiity,  for  money, 
so  that  the  transfer  of  it  by  a  person  not 
being  the  true  owner  to  a  bona  fide  holder, 
for  value,  can  confer  a  good  title  on  the  lat- 
ter. The  scrip  in  question  was  bought  by  the 
plaintiff  through  one  Clayton,  a  stockbroker, 
and  was  allowed  to  remain  in.  Clayton's 
Bands,  who""  unlawfully  pledged  it_svith  the 
(le?endants,  who  are  bankers,  as  security  for 
a  loan  of  money.  Clayton  having  become 
bankrupt  and  having"  absconded,  the  defend- 
ants sold  the  scrip  at  the  market  price  of  the 
day,  and  the  plaintiff  brings  his  action  to  re- 
cover the  amount  realized  on  such  sale. 

The  scrip  in  question  was  in  the  following 
form:— "1873.  C.  1873.  Imperial  Govern- 
ment of  Russia.  Issue  of  £15,000,000  sterling 
nominal  capital  in  5  per  cent,  consolidated 
bonds  of  1873.  Negotiated  by  Messrs.  N.  M. 
Rothschild  &  Sons,  London,  and  Messrs.  De 
Rothschild  Brothers,  Paris.  Bearing  inter- 
est" half-yearly,  payable  in  London  from  1st 
of  December,   1873.     Scrip  for  one  hundred 

pounds  stock.  No.  .     Received  the  sum 

of  twenty  pounds,  being  the  first  instalment 
of  20  per  cent,  upon  one  hundred  pounds 
stock,  and  on  payment  of  the  remaining  in- 
stalments at  the  period  specified,  the  bearer 
will  be  entitled  to  receive  a  definitive  bond 
or  bonds  for  one  hundred  pounds  after  re- 
ceipt thereof  from  the  imperial  government. 
London,  1st  December,  1873.  The  instal- 
ments are  to  be  paid  at  our  office  as  follows: 
£15  per  cent.,  or  £15,  on  the  5th  February, 
1874;  £15  per  cent,  or  £15,  on  the  Oth  of 
March,  1874;  £20  per  cent.,  or  £20,  on  the  2nd 
May,  1874;  £23  per  cent.,  or  £23,  on  the  0th 
.Tune,  1874.  Subscribei's  may  pass  the  sam»> 
under  a  discount  at  3  per  cent,  per  annum,  on 
any  Monday  or  Thursday  after  the  l(>th  in- 
stant. In  default  of  payment  of  these  instal- 
ments at  the  proper  dates,  all  previous  pay- 
ments will  be  liable  to  forfeiture."  Then  fol- 
low four  other  receipts  for  £20  each,  making 
up  the  £100,  for  which  the  bond  is  after- 
wards to  be  given. 

The  scrip  issued  by  the  authority  of  the 
Austro-Hungarian  government  was  in  a  pre- 
■cisely  similar  form.  The  scrip  in  question 
was  issued  by  Messrs.  De  Rothschild  as  the 


agents  of  the  Russian  and  Austro-Hungarian 
governments,  they  being  employed  by  these 
governments  to  negotiate  and  raise  a  loan  for 
them  respectively  on  government  bonds,  bear- 
ing interest,  to  be  afterwards  issued  in  ex- 
change for  the  scrip  when  all  the  instal- 
ments of  the  sum  for  which  the  scrip  was  is- 
sued should  Jiave  been  paid  up.  No  question 
is  raised  as  to  the  fact  of  Messrs.  De  Roth- 
schild having  acted  in  the  manner  as  agents 
of  the  two  governments,  or  of  the  scrip  hav- 
ing been  issued  by  the  authority  of  the  lat- 
ter. The  bonds  issued  on  the  last  instalment 
being  paid  up  were,  as  will  be  seen  on  refer- 
ence to  the  .special  case  in  which  they  are 
set  out,  in  conformity  with  the  terms  stated 
in  the  scrip.  It  is  only  necessary  to  point 
out  that  the  bond,  agreeably  to  the  terms  of 
the  scrip,  is  made  payable  to  bearer. 

The  0th  paragraph  of  the  special  case  con- 
tains the  following  statement,  upon  which,  as 
it  appears  to  us,  the  decision  of  the  case 
turns:  "The  scrip  of  loans  to  foreign  govern- 
ments, entitling  the  bearer  thereof  to  bonds 
for  the  same  amount  when  issued  by  the  gov- 
ernment, has  been  well  known  to  and  largely 
dealt  in  by  bankers,  money  dealers,  and  the 
members  of  the  English  and  foreign  stock  ex- 
changes, and  through  them  by  the  public,  for 
over  fifty  years.  It  is  and  has  been  the 
usage  of  such  bankers,  money  dealers,  and 
stock  exchanges,  during  all  that  time,  to  buy 
and  sell  such  scrip  and  to  advance  loans  of 
money  upon  the  seciu-ity  of  it  before  the 
bonds  were  issued,  and  to  pass  the  scrip  up- 
on such  dealing  by  mere  delivery  as  a  nego- 
tiable instrument  transferable  by  delivery, 
and  this  usage  has  always  been  recognized  by 
the  foreign  governments  or  their  agents  de- 
livering the  bonds  when  issued  tojhe  bearers 
of  the  scrip.  Tliis  usage  extended  alike  to 
scrip  issued  by  their  agents  in  England,  and 
it  extended  to  the  scrip  now  in  question, 
which  was  largely  dealt  in  as  above  men- 
tioned. Such  scrip  often  passes  through  the 
hands  of  several  buyers  and  dealers  in  suc- 
cession before  the  issue  of  the  bonds  repre- 
sented by  it."     L.  R.  10  Exch.  79. 

The  contention  on  the  part  of  the  plaintiff 
was  that,  scriji  of  this  description  not  coming 
under  the  category  of  any  of  the  securities 
for  money  which,  by  the  law  merchant,  are 
capable  of  being  transferred  by  indorsement 
or  delivery.— indeed,  not  being  a  .security  for 
money  at  all,  but  only  for  the  future  delivery 
of  a  bond,— the  right  of  the  true  owner  could 
not  be  divested  by  the  fraudulent  transfer  of 
tiie  chattel  by  a  person  who  had  no  title  as 
against  the  owner. 

On  the  part  of  the  defendants  it  was  con- 
tended that  the  finding  as  to  general  usage 
brought  the  case  within  the  decisions  in  Gor- 
gier  V.  Mieville,  3  Barn.  &  C.  45,  and  Attor- 
ney General  v.  Bouwens,  4  Mees.  &  W.  171. 
In  the  former  of  these  cases  a  bond  of  the 
king  of  Prussia,  payable  "to  every  person 
who  should  for  the  time  being  be  the  holder 
of  the  bond,"  had  been,  as  in  the  present  in- 


10 


HISTORY  OF  NEGOTIABLE  INSTRUMENTS. 


stance,  unlawfully  pledged  with  the  defend- 
ants In  the  action  by  an  af;eut  who  had  been 
intrusted  with  it  for  the  purpose  of  receiving 
the  interest  on  it.  The  owner  liaving  brought 
an  action  to  recover  the  bond,  it  was  proved 
on  the  trial  that  bonds  of  this  description 
were  sold  in  the  market,  and  passed  from 
hand  to  hand  daily,  like  exchequer  bills,  at  a 
variable  price  according  to  the  state  of  the 
market.  Upon  these  facts  Ix)rd  Chief  Jus- 
tice Abbott  was  clearly  of  opinion  that  this 
bond  might  be  pledged  to  any  person  who  did 
not  know  that  the  person  pledging  it  was  not 
the  real  owner,  and  he  directed  the  jury  to 
find  a  verdict  for  the  defendants,  unles.s  they 
thought  that  the  defendants  knew  that 
Messrs.  Agassiz  &  Co.,  the  pledgors,  were  not 
the  owners  of  the  bond  at  the  time  when 
they  depositeil  it  in  their  hands.  A  rule  nisi 
for  a  new  trial,  having  been  obtained,  was 
afterwards  discharged.  Abbott,  C.  J.,  giving 
judgment  says:  "This  instrument  in  its  form 
is  an  acknowledgment  by  the  king  of  Prussia 
that  the  sum  mentioned  in  the  bond  is  due 
to  every  person  who  shall  for  the  time  being 
be  the  holder  of  it;  and  the  principal  and  in- 
terest is  payable  in  a  certain  mode  and  at 
certain  periods  mentioned  in  the  bond.  It  is, 
therefore,  in  its  nature  precisely  analogous  to 
a  banker's  note  payable  to  bearer,  or  to  a  bill 
of  exchange  indorsed  in  blank.  Being  an  In- 
strument, therefore,  of  the  same  description, 
it  must  bo  subject  to  the  same  rule  of  law, 
that  whoever  is  the  holder  of  it  has  power  to 
give  title  to  any  per.son  honestly  acquiring  it. 
It  is  distinguishable  from  the  case  of  Glyn  v. 
Baker,  13  East.  ;">(.«),  because  there  it  did  not 
appear  that  India  bonds  were  negotiable,  and 
no  other  person  could  have  sued  on  them  but 
the  obligee.  Here,  on  the  contrary,  the  bond 
is  payable,  to  the  bearer,  and  it  was  proved  at 
the  trial  that  bonds  of  this  description  were 
negotiated  like  exchequer  bills."  In  Attor- 
ney General  v.  Buuwens.  4  Mees.  &  W.  171, 
the  question  as  to  the  negotiable  character  of 
foreign  bonds  arose  in  a  different  form,  the 
question  being  whctljcr  Russia.  Danish,  and 
Dutch  bonds,  of  wliich  a  testator  dying  in 
this  country  was  holder  at  the  time  of  his 
death,  were  liable  to  probate  duty.  In  a 
special  verdict  taken  at  the  trial  it  was  ex- 
pressly found  "that  the  said  Russian,  Danish 
and  Dutch  bonds,  respectively  were  and  are, 
and  always  have  been,  marketable  secm*ities 
within  this  kingdom,  and  always  have  been 
sold  and  transfernil  within  this  kingdom  by 
delivery  only,  and  the  bearers  thereof  have 
always  been  deemed  ami  reputed  to  be,  and 
have  always  been  dealt  with  as  being,  legally 
entitled  to  the  principal  moneys  secured  by 
the  said  bonds  respectively,  and  to  the  inter- 
est or  dividends  from  time  to  time  arising  or 
accruing  in  respect  of  the  same.  It  never 
has  l)ecn  nor  is  it  necessary  to  do  or  perform 
any  act  whatsoever  out  of  the  kingdom  of 
England,  in  order  to  render  a  transfer  of  any 
of  the  said  bonds  valid,  and  tin-  bearers  of 
the  said  bonds,  respectively,  have  always  been 


treated  and  dealt  with  by  the  agents  of  the 
empire  of  Russia,  and  of  the  kingdom  of  Hol- 
land and  Denmark,  as  the  persons  duly  en- 
titled to  the  principal  moneys  sectu-ed  by  the 
said  bonds  respectively,  and  the  interest  or 
dividends  thereof,  and  such  agents  have  al- 
ways paid  all  moneys  due  and  payable  for 
and  in  respect  of  the  said  bonds  respectively, 
according  to  the  tenor  and  effect  thereof  to 
the  bearers  of  the  same."  In  like  manner, 
in  Ileseltine  v.  Siggers.  1  Exch.  85G,  18  Law 
J.  Exch.  Kit).  Spanish  bonds  were  treated  as 
passing  by  mere  delivery. 

Strenuous  efforts  were  made  by  Mr.  Ben- 
jamin in  his  able  argument  on  behalf  of  the 
plaintiff"  to  distinguish  the  present  case  from 
Gorgier  v.  Mieville.  3  Barn.  &  C.  45.  He  in- 
sisted, lii-st,  that  although  it  must  be  admitted 
that  if  a  bond  had  been  given  in  lieu  of  this 
scrip,  the  bond  would  have  been  a  negotiable 
instrument,  as  the  case  would  then  have  come 
within  Gorgier  v.  Mieville,  3  Barn.  &  C.  45, 
here  there  was  no  engagement  on  the  part  of 
the  foreign  government.  The  only  party  sign- 
ing the  scrip  ov  who  could  be  held  bound  by  it 
wei-e  the  Messrs.  De  Rothschild;  and  the  per- 
sons advaucing  their  money,  and  taking  the 
scrip  could  look  only  to  them.  Secondly,  that 
even  assuming  that  the  issuing  of  the  scrip 
was  to  be  taken  to  be  the  act  of  the  foreign 
government,  yet  that  as  it  had  been  issued  in 
London,  aud  the  parties  taking  it  had  ad- 
vanced their  money  in  this  country,  the  con- 
tract must  be  taken  to  have  been  made  here, 
and  must  be  subject  to  the  law  of  England. 
That  when  a  foreign  sovereign  negotiated  a 
loan  in  this  country,  through  his  agent,  it  was 
in  effect  the  same  thing  as  though  such  sov- 
ereign had  himself  come  to  this  country  and 
entered  into  the  coutract  in  person.  That, 
consequently,  in  either  view,  the  contract  aris- 
ing on  the  scrip  must  be  taken  to  have  been 
made  liere  and  must  be  dealt  with  according 
to  English  law.  That  this  being  so.  the  case 
of  Crouch  V.  Credit  Foncier  of  England,  L.  R. 
8  Q.  B.  374,  was  an  authority  which  estab- 
lislu'd  that  it  was  not  competent  to  anyone 
by  tlie  law  of  England,  to  give  to  a  security, 
not  negotiable  by  the  law  merchant,  the  char- 
acter of  negotiability,  by  making  it  payable 
to  bearer,  even  though  such  security  were 
security  for  money.  That,  a  fortiori,  this 
scrip,  not  being  a  promise  to  pay  money,  but 
only  to  give  a  bond  when  all  the  instalments 
should  liave  been  paid  up,  could  not  have  the 
character  of  negotiability  given  to  it  by  being 
made  payable  to  bearer.  That  c;hoses  in  ac- 
tion not  being  assignable  by  the  general  com- 
mon law,  it  was  only  by  the  law  merchant 
which  was  recognized  by  the  common  law 
and  adopted  by  it  that  a  particular  class  of 
securities  for  money  could  be  made  nego- 
tiable, either  by  indorsement,  or,  by  being 
made  pjiyable  to  bearer;  and  that  this  class 
of  securities  was  contined  to  bills  of  exchange, 
promissory  notes,  and  drafts  payable  to  beaf^ 
er.  Tliat  this  scrip  did  not  coincide  with 
either  of  the  seciu-ities  for  money  to  which  by 


HISTORY  OF  NEGOTIABLE  INSTRUMENTS. 


11 


the  law  merchant  the  quality  of  being  so  ren- 
dered negotiable  had  been  conceded;  the 
more  so  as  in  fact  it  was  not  a  security  for 
money  at  all,  but  only  an  agreement  to  give 
such  a  security  in  the  shape  of  a  bond.  That 
the  bonds  of  foreign  governments  had  been 
held  to  be  negotiable  by  the  courts  of  this 
country,  not  because  they  were  negotiable  by 
the  law  of  the  couutrj'  in  which  they  were 
made,  but  because  they  were  in  substance 
and  effect  promissory  notes. 

We  entirely  dissent  from  the  contention 
that  the  contract"  in  question  is  one  in  which 
theMessrs.  De  Rothschild  can  be  looked  upon 
as  principals.  And  though  our  decision  on 
that  head  may  not  be  essential  to  the  con- 
clusion we  have  arrived  at  on  the  case,  we 
think  it  desirable  in  a  matter  in  which  the 
public  are  so  much  interested  that  our  view 
should  be  made  known.  It  is  plain  on  the 
face  of  the  document  that  the  Messrs.  De 
Rothschild  only  profess  to  be  acting  as  the 
agents  of  the  foreign  governments.  The  law 
on  this  subject  is  correctly  laid  down  in  Story 
on  Agency,  in  the  chapter  on  the  Liabilities 
of  Public  Agents  (section  302).  Collecting  the 
English  and  American  authorities  in  a  note, 
the  learned  jm-ist  writes  as  follows:  "In  the 
ordinary  course  of  things,  an  agent  coutract- 
ing  oa  behalf  of  the  government,  or  of  the 
public,  is  not  persQualij'  boimd  by  such  a  con- 
tract, even  though  he  would  be  by  the  terms 
of  the  contract,  if  it  were  an  agency  of  a 
private  nature.  The  reason  of  the  distinction 
is,  that  it  is  not  to  be  presumed,  either  that 
the  public^  agent  means  to  bind  himself  per- 
sonally in  acting  as  a  functionary  of  the  gov- 
ernment, or  that  the  party  dealing  with  him 
in  his  pubUc  character,  means  to  rely  on  his 
individual  responsibility.  On  the  contrary, 
the  natural  presumption  in  such  cases  is  that 
the  contract  was  made  upon  the  credit  and 
responsibility  of  the  government  itself,  as  pos- 
sessing an  entire  ability  to  fulfil  all  its  just 
contracts,  far  beyond  that  of  any  private 
man,  and  that  it  is  ready  to  fulfil  them  not 
only  with  good  faith,  but  with  punctilious 
promptitude,  and  in  a  spirit  of  libei-al  cour- 
tesy. Great  public  inconvenience  would  re- 
sult from  a  different  doctrine,  considering  the 
various  public  functionaries  which  the  gov- 
ernment must  employ  in  order  to  transact  its 
ordinary  business  and  operations;  and  many 
persons  would  be  deterred  from  accepting  of 
many  offices  of  trust  under  the  government, 
if  they  were  held  personally  liable  upon  all 
their  official  contracts.  This  principle  not 
only  applies  to  simple  contracts,  both  parol 
and  written,  but  also  to  instruments  imder 
seal,  which  are  executed  by  "agents  of  the 
government  in  their  own  name,  and  purport 
to  be  made  by  them  on  behalf  of  the  govern- 
ment; for  the  like  presumption  prevails  in 
such  cases,  that  the  parties  contract  not  per- 
sonally, but  merely  officially  within  the  sphere 
of  their  appropriate  duties." 

Chancellor  Kent  lays  down  the  law  to  the 
like  effect  (2  Comm.,  7th  Ed.,  p.  810):    "There 


is  a  distinction  in  the  books  between  public 
and  private  agents  on  the  point  of  personal 
responsibility.  If  an  agent,  on  behalf  of  the 
government,  makes  a  contract  and  describes 
himself  as  such,  he  is  not  personally  bound, 
even  though  the  terms  of  the  contract  be 
such  as  might,  in  a  case  of  a  private  nature, 
involve  him  in  a  personal  obligation.  The 
reason  of  the  distinction  is,  that  it  is  not  to 
be  presumed  that  a  public  agent  meant  to 
bind  himself  individually  for  the  government, 
and  the  party  who  deals  with  him  in  that 
character  is  justly  supposed  to  rely  upon  the 
good  faith  and  undoubted  ability  of  the  gov- 
ernment. But  the  agent  in  behalf  of  the 
public  may  still  bind  himself  by  an  express 
engagement,  and  the  distinction  terminates  in 
a  question  of  evidence.  The  inquiry  in  all 
cases  is,  to  whom  was  the  credit,  in  the  con- 
templation of  the  parties,  intended  to  be  giv- 
en. This  is  the  general  inference  to  be  drawn 
from  all  the  cases,  and  it  is  expressly  de- 
clared in  some  of  them." 

It  is  true  these  authors  are  speaking  of  per- 
sons acting  as  agents  for  their  own  govern- 
ments; but  the  reasoning  applies  equally  to 
persons  acting  as  agents  for  a  foreign  gov- 
erjQn^gat.  and  the  same  presumption  must 
arise  in  both  cases.  Nor  can  we  suppose  that 
the  persons  takjng  this  scrij)  did  so  otherwise 
than  thi'ough  their  laiili  in  the  honour  of  the 
foreign  government,  just  as  they  woidd  have 
had  to  trust  to  it  on  their  afterwards  receiv- 
ing the  bonds  in  lieu  of  the  scrip.  They 
would  then  be  equally  without  legal  redress 
against  the  foreign  government,  and  must 
have  trusted  to  its  honour  in  the  fulfilment  of 
its  engagement. 

We  think  it  unnecessary  to  enter  upon  the 
question  whetheiTthe  contract  tlms  entered 
into  is  to  be  considered  as  a  Kus-siau  nr  as  an 
English  contract,  as  we  agree  in  thinking 
that  its  negotiable  chai-acter,  if  it  exists  at 
all,  must  depondjQol;_-Oli  what  might  be  its 
negotiability  by  the  foreign  law,  but  on  how 
far  the  imiversal  usage  of  the  monetary  world 
has  given  it  that  character  here.  "The  ques- 
tion," says  Tindal,  C.  J.,  in  Lang  v.  Smith,  7 
Bing.  284,  at  page  293,  "is  not  so  much  what 
is  the  usage  in  the  country  whence  the  instiii- 
ment  comes  as  in  the  countrj^  where  it  pass- 
ed." The  substance  of  Mr.  Benjamin's  argu- 
ment is  that,  because  the  scrip  does  not  cor- 
respond with  any  of  the  forms  of  the  securi- 
ties for  money  whicli  have  been  hitherto  held 
to  be  negotiable  by  the  law  merchant,  and 
does  not  contain  a  direct  promise  to  pay 
money,  but  only  a  promise  to  give  seciu'ity 
for  money,  it  is  not  a  seciu'ity  to  which, 
by  the  law  merchant,  the  character  of  ne- 
gotiability can  attach.  Having  given  the 
fullest  consideration  to  this  argument,  we 
are  of  opinion  that  it  cannot  prevail.  It  is 
founded  on  the  view  that  the  law  merchant 
thus  referred  to  is  fixed  and  stereotyped,  and 
incapable  of  being  expanded  and  enlarged  so 
as  to  meet  the  wants  and  requirements  of 
trade  in  the  varying  circumstances  of  com- 


12 


HISTORY  OF  NEGOTIABLE  INSTRUMENTS. 


morce.  It  Is  true  that  the  law  morchant  Is 
sometimes  spoken  of  as  a  fixed  body  of  hiw, 
forming  part  of  the  common  law,  and,  as  it 
were,  coeval  with  it  But,  as  a  matter  of 
legal  history,  this  view  is  altogether  incor- 
rect. The  law  merchant  thus  spoken  of  with 
reference  to  bills  of  exchange  and  other  ne- 
gotiable seiMirities.  though  forming  part  of 
the  general  body  of  the  lex  mercatoria,  is  of 
comparatively  recent  origin.  It  is  neither 
more  nor  less  than  the  u.sages  of  lucrchants 
and  traders  in  the  different  departments  of 
trade,  ratified  by  the  decisions  of  courts  of 
law,  which,  U110U  such  usages  being  pr«)ved 
before  them,  have  adopted  them  as  settled 
law,  with  a  view  to  the  interests  of  trade  and 
the  public  convenience,  the  court  proceeding 
herein  on  the  well-known  principle  of  law 
that,  with  reference  to  transactions  in  the 
diftereut  departments  of  trade,  courts  of  law. 
In  giving  effect  to  the  contracts  and  dealings 
■of  the  parti»>s.  will  as.sume  that  the  latter 
have  dealt  with  one  another  on  the  footing  of 
any  custom  or  usiige  prevailing  generally  in 
the  particular  department.  By  this  process, 
what  before  was  usage  only,  unsanctioned  by 
legal  decision,  has  become  engrafted  upon,  or 
intX)rporated  into,  the  common  law,  and  may 
thus  be  said  to  form  part  of  it.  "When  a 
general  usage  has  been  judicially  ascertained 
and  established,"  says  Lord  Campbell,  in 
lirandao  v.  Barnett.  12  Clark  &  F..  at  page 
805,  "it  becomes  a  part  of  the  law  merchant, 
which  courts  of  justice  are  l>ound  to  know 
and  recognize." 

Bills  of  exchange  are  known  to  be  of  com- 
paratively modern  origin,  having  been  first 
brought  into  use,  so  far  as  is  at  present 
known,  ^the  Florentines  in  the  twelfth,  and 
by  the  Venetians  about  the  thirteenth,  ceji- 
tury.  The  use  of  them  gradually  found  its 
vay  into  France,  and,  still  later,  and  but 
.slowly,  into  England.  We  find  it  stated  in  a 
law  tract  by  Mr.  Macleod,  entitled  "Specimen 
■of  a  Digest  of  the  Law  of  Bills  of  Exchange," 
printed,  we  believe,  as  a  rejiort  to  the  gov- 
ernment, but  which,  from  its  research  and 
abilit}',  deserves  to  be  produced  in  a  form  cal- 
culated to  insure  a  wider  circulation,  that 
Richard  Malynes,  a  London  merchant,  who 
publislied  a  work  called  the  "Lex  Mercatoria," 
in  H;l'-j,  and  who  gives  a  full  account  of  these 
bills  as  u.sed  by  the  merchants  of  Amsterdam, 
Hamburg,  and  otiier  places,  expressly  states 
that  such  bills  were  not  used  in  England. 
There  is  reason  to  think,  however,  that  this 
is  a  mistake.  Mr.  Maclcod  shews  that  prom- 
issory notes,  payable  to  bearer,  or  to  a  man 
and  his  assigns,  were  known  in  tlie  time  of 
Edward  IV.  Indeed,  as  early  as  tiie  statute 
of  3  Rieh  II.,  c.  3,  bills  of  exchange  are  re- 
ferred to  as  a  means  of  conveying  money  out 
of  the  realm,  though  not  as  a  process  in  use 
among  English  merchants.  But  the  fact  that 
a  London  merchant,  writing  expressly  on  the 
law  merch.int,  was  unaware  of  the  use  of  the 
bills  of  exchange  in  this  coimtry,  shews  that 
that  use  at  the  time  he  wrote  must  have  been 


'  limited.  According  to  Professor  Stor>',  who 
1  herein  is,  no  doubt,  perfectly  right,  "the  In- 
triKluction  and  use  of  bills  of  exchange  in 
England,"  as  indeed  it  was  everywhere  else, 
"seems  to  have  been  founded  on  the  mere 
practice  of  merchants,  and  gradually  to  have 
j  acquired  the  force  of  a  custom."  With  the 
i  development  of  English  commerce  the  use  of 
1  these  most  convenient  instruments  of  com- 
mercial traffic  would,  of  course,  increase; 
yet,  according  to  Mr.  Chitty,  the  earliest  case 
I  on  the  subject  to  be  foimd  in  the  English 
books  is  that  of  Martin  v.  Boure,  Cro.  Jac.  6. 
i  in  the  first  James  L  Up  to  this  time  the 
practice  of  making  these  bills  negotiable  by 
indorsement  had  been  unknown,  and  the  ear- 
I  lier  bills  arc  found  to  be  made  payable  to  a 
;  u^an  and  his  assigns,  though  in  some  in- 
stances to  bearer.  But  about  this  period— 
that  is  to  say,  at  the  close  of  the  sixteenth  or 
the  coiumcucement  of  the  seventeenth  cen- 
tury—the practice  of  making  bills  payable  to 
order,  and  transferring  them  by  indorsement, 
took  its  rise.  Hartmann,  in  a  very  learned 
work  on  Bills  of  Exchange,  recently  published 
in  Germany,  states  that  the  first  known  men- 
tion of  the  indorsement  of  these  instruments 
occm-s  in  the  Neapolitan  Pragmatica  of  1007. 
Slavery,  cited  by  Mons.  Nouguier,  in  his 
work  "Des  Lettres  de  Change,"  had  assigned 
to  it  a  later  date,  namely,  1('.20.  From  its 
obvious  convenience  this  practice  speedily 
came  into  general  use,  and,  as  part  of  the 
I  general  custom  of  merchants,  received  the 
I  sanction  of  our  courts.  At  first  the  use  of 
bills  of  exchange  seem  to  have  been  confined 
j  to  foreign  bills  between  English  and  foreign 
merchants.  It  was  afterwards  extended  to 
I  domestic  bills  between  traders,  and  finally  to 
bills  of  all  persons,  whether  traders  or  not. 
See  Chit.  Bills  (8th  Ed.)  p.  13.  In  the  mean- 
time, promissory  notes  had  also  come  into 
use,  ditfering  herein  from  bills  of  exchange: 
that  they  were  not  drawn  upon  a  third  party, 
but  contained  a  simple  proiuise  to  pay  by  the 
maker,  resting,  therefore,  upon  the  security 
of  the  maker  alone.  They  were  at. first  made 
payal>l<?  to  bearer,  but  when  the  practice  of 
making  bills  of  exchange  payable  to  order, 
and  making  them  transferable  by  indorse- 
ment, had  once  become  established,  the  prac- 
tice of  making  promissory  notes  payable  to 
order,  and  of  transferring  them  by  indorse- 
ment, as  had  been  done  with  bills  of  ex- 
change, speedily  prevailed.  And  for  some 
time  the  courts  of  law  acted  upon  the  usage 
with  reference  to  promissory  notes,  as  well 
as  with  reference  to  bills  of  exchange.  In 
1(!.S0,  in  the  case  of  Shclden  v.  Hentley,  2 
Sliow.  1()0,  an  action  was  brought  on  a  note 
under  seal  by  which  the  defendant  promised 
to  pay  to  bearer  £100,  and  it  was  objected 
that  the  note  was  void  because  not  payable 
to  a  specific  person.  But  it  was  said  by  the 
court:  "Traditio  facit  chartam  loqui,  and  by 
the  delivery  he  (the  maker)  expounds  the  per- 
son before  meant;  as  when  a  merchant  prom, 
ises  to  pay  to  the  bearer  of  the  note,  anyone 


HISTORY  OF  2TEG0TIABLE  INSTRUMENTS. 


1^ 


that  brings  the  note  shall  be  paid."  Jones,  J., 
said  that  "it  was  the  custom  of  merchants 
that  made  that  good."  In  Bromwich  v. 
Loyd,  2  Lutw.  1582,  the  plaintiff  declared 
upon  the  custom  of  merchants  in  London  on 
a  note  for  money  payable  on  demand,  and 
recovered;  and  Treby,  C.  J.,  said  that  "bills 
of  exchange  were  originally  between  foreign- 
ers and  merchants  trading  with  the  English. 
Afterwards,  when  such  bills  came  to  be  more 
frequent,  then  they  were  allow'ed  between 
merchants  trading  in  England,  and  after- 
wards between  any  traders  whatsoever,  and 
now  between  any  persons,  whether  ti'adiug  or 
not;  and  therefore  the  plaintiff  need  not  al- 
lege any  custom,  for  now  those  bills  were  of 
that  general  use  that  upon  an  indebitatus  as- 
sumpsit they  may  be  given  in  evidence  upon 
the  trial."  To  which  Powell,  J.,  added:  "On 
indebitatus  assumpsit  for  money  received  to 
the  use  of  the  plaintiff  the  bill  may  be  left  to 
the  jury  to  determine  whether  it  was  given 
for  value  received."  In  Williams  v.  Wil- 
liams, Garth.  2G9,  where  the  plaintiff  brought 
his  action  as  indoi-see  against  the  payee  and 
indorser  of  a  promissory  note,  declaring  on 
the  custom  of  merchants,  it  was  objected  on 
error  that,  the  note  having  been  made  in  Lon- 
don, the  custom,  if  any,  should  have  been 
laid  as  the  custom  of  London.  It  was  an- 
swered "that  this  custom  of  merchants  was 
part  of  the  common  law,  and  the  court  w'ould 
take  notice  of  it  ex  officio;  and  therefore  it 
was  needless  to  set  forth  the  custom  specially  ; 
in  the  declaration,  but  it  was  sufficient  to  say 
that  such  a  person  'secundum  usum  et  con- 
suetudinem  mercatorum,'  drew  the  bill." 
And  the  plaintiff  had  judgment. 

Thus  far  the  practice  of  merchants,  traders, 
and  others  of  treating  promissory  notes, 
whether  payable  to  order  or  bearer,  on  the 
same  footing  as  bills  of  exchange,  had  re- 
ceived the  sanction  of  the  courts,  but.  Holt 
having  become  chief  justice,  a  somewhat  un- 
seemly conflict  arose  between  him  and  the 
merchants  as  to  the  negotiability  of  prom- 
issory notes,  whetlier  payable  to  order  or  to 
bearer;  the  chief  justice  taking  what  must 
now  be  'admitted  to  have  been  a  narrow- 
minded  view  of  the  matter,  setting  his  face 
strongly  against  the  negotiability  of  these 
instruments,  contrary,  as  we  are  told  by  au- 
thority, to  the  opinion  of  Westminster  Hall, 
and  in  a  series  of  successive  cases  persisting 
in  holding  them  not  to  be  negotiable  by  in- 
dorsement or  delivery.  The  inconvenience 
to  trade  aiising  therefrom  led  to  the  passing 
of  tlie  statute  of  3  &  4  Anne,  c.  9,  Mhereby 
promissory  notes  were  made  capable  of  be 
ing  assigned  by  indorsement  or  made  paya- 
ble to  bearer,  and  such  assignment  was  thus 
rendered  valid  beyond  dispute  or  difficulty. 
It  is  obvious  from  the  preamble  of  the  stat- 
ute, which  merely  recites  that  "it  had  been 
held  that  such  notes  were  not  within  the  cus- 
tom of  merchants,"  that  these  decisions  were 
not  acceptable  to  tlie  profession  or  the  coun- 
try.    Nor  can  there  be  much  doubt  that  bv 


the  usage  prevalent  amongst  merchants  these 
notes  had  been  treated  as  seciu'ities  negotia- 
ble by  the  customary  method  of  assignment, 
as  much  as  bills  of  exchange,  properly  so 
called.  The  statute  of  Anne  may,  indeed, 
practically  speaTangr^e'Tooked  upon  as  a 
declaratory  statute,  confirming  the  decisions 
piTor  to  the  time  of  Lord  Holt. 

We  now  arrive  at  an  epoch  when  a  new 
form  of  security  for  money,  namely,  gold- 
smiths' or  liaiikcis'  iintis,  came  into  gen- 
eral use.  Holding  tlicm  to  be  part  of  the 
currency  of  the  country  as  cash.  Lord  Mans- 
field and  the  court  of  king's  bench  had  no 
difficulty  in  holdyig,  in  Miller  v.  Race,  1  Bur- 
rows, 452,  that  the  proper tj'  in  such  a  note 
passes,  like  that  in  cash,  by  delivery,  and 
that  a  party  taking  it  bona  fide,  and  for  value, 
is  consequently  entitled  to  hold  it  against  a 
former  owner  from  whom  it  has  been  stolen. 
In  like  manner  it  was  held,  in  Collins  v. 
Mai-tin,  1  Bos.  &  P.  G48,  that  where  bills  in- 
dorsed in  blank  had  been  deposited  with  a 
banker,  to  be  received  when  due,  and  the  lat- 
ter had  pledged  them  with  another  banker 
as  security  for  a  loan,  the  owner  could  not 
bring  trover  to  recover  them  from  the  holder. 
Both  these  decisions  of  course  proceeded  on 
the  ground  that  the  property  in  the  bank 
note  payable  to  bearer  passed  by  delivery, 
that  in  the  bill  of  exchange  by  indorsement 
in  blank,  provided  the  acquisition  had  been 
made  bona  fide.  A  similar  question  arose 
in  Wookey  v.  Pole,  4  Barn.  &  Aid.  1,  in  re- 
spect of  an  exchequer  bill,  notoriously  a  se- 
curity of  modern  growth.  These  securities 
being  made  in  favor  of  blank  or  order,  con- 
tained this  clause,  "If  the  blank  is  not  filled 
up,  the  bill  will  be  paid  to  bearer."  Such 
an  exchequer  bill,  having  been  placed,  with- 
out the  blank  being  filled  up,  in  the  hands 
of  the  plaintiff's  agent,  had  been  deposited 
by  him  with  the  defendants,  on  a  bona  fide 
advance  of  money.  It  was  held  by  three 
judges  of  the  queen's  bench— Bayley,  J.,  dis- 
sentiente — that  an  exchequer  biU  \\as  a  ne- 
gotiable security,  and  judgment  was  there- 
fore given  for  the  defendants.  The  judg- 
ment of  Holroyd,  J.,  goes  fully  into  the  sub- 
ject, pointing  out  the  distinction  between 
money  and  instruments  which  are  the  repi-e- 
sentatives  of  money  and  other  forms  of  prop- 
erty. "The  courts,"  he  says,  "have  consid- 
ered these  instruments  either  promises  or  or- 
ders for  the  payment  of  money,  or  instru- 
ments entitling  the  holder  to  a  sum  of  money, 
as  being  appendages  to  money,  and  follow- 
ing the  natm'e  of  their  principal."  After  re- 
ferring to  the  authorities,  he  proceeds: 
"These  authorities  shew  that  not  only  mon- 
ey itself  may  pass,  and  the  right  to  it  may 
arise,  by  cuiTeucy  alone,  but,  further,  that 
these  mercantile  instruments,  which  entitle 
the  bearer  of  them  to  money,  may  also  pass, 
and  the  right  to  them  may  arise,  in  like  man- 
ner, by  currency  or  delivery.  These  deci- 
sions proceed  upon  the  nature  of  the  prop- 
erty (i.  e.  money)  to  which  such  instruments 


14 


HISTOUY  OF  NEGOTIABLE  INSTRUMENTS. 


give  the  right,  and  which  Is  In  itself  current, 
and  tlie  effect  of  the  InsUuments,  which  ei- 
tlier  give  to  their  holders,  merely  as  such,  a 
right  to  receive  the  money,  or  specify  them 
as  the  iwrsoMs  entitled  to  receive  It."  An- 
other very  remarkable  Instance  of  the  etti- 
cacy  of  usage  Is  to  be  found  in  much  more 
recent  times.  It  Is  notorious  that,  with  the 
exception  of  the  Bank  of  England,  the  sys- 
tem of  banking  has  recently  undt-rgonc  an 
entire  change.  Instead  of  tlie  bunker  issu- 
ing his  own  notes  in  return  for  the  money  of 
the  customer  deposited  with  him,  he  gives 
cretllt  in  account  to  the  depositor,  and  leaves 
it  to  the  latter  to  draw  upon  him,  to  bearer 
or  order,  by  what  is  now  called  a  "cheque." 
Upon  this  state  of  things  the  generaPcourse 
of  dealing  between  bankers  and  their  cus- 
tomers has  attached  Incidents  previously  un- 
known, an«l  these,  by  the  decisions  of  the 
courts,  have  become  tixed  law.  Thus,  while 
an  ordinary  drawee,  although  in  poissession 
of  fuiuls^of'llie  drawer,  is  not. bound  to  ac- 
cept, unless  by  his  own  agreement  or  con- 
sent, the  banker,  If  ho  has  funds.  Is  bound 
to  pay  on  presentation  of  a  cheque  on  de- 
mand.  Kven  admission  of  funds  Is  not  sutB- 
clent  to  bind  an  ordinary  drawee,  while  it  is 
surticlent  with  a  banker;  and  the  money  de- 
posited with  a  banker  is  not  only  money 
lent,  but  the  banker  Is  bound  to  repay  it 
when  called  for  by  the  draft  of  the  custom- 
er. See  rott  v.  Clegg,  IG  Mees.  &  W.  321. 
Besides  this,  a  custom  has  grown  up  among 
bankers  themselves  of  marking  cheques  as 
good  for  the  purposes  of  clearance  by  which 
they  become  bound  to  one  another.  Though 
not  Immediately  to  the  present  purpose,  bills 
^f  lading  may  also  be  referred  to  as  an  in- 
stance of  how  general  mercantile  usage  may 
give  effect  to  a  writing  which  wltliout  it 
would  not  have  had  that  effect  at  common 
law.  It  Is  from  nn  rcantlle  usage,  as  proved 
in  evidence,  and  ratUh'd  by  judicial  decision 
In  the  great  case  of  Llckbarrow  v.  Mason,  2 
Term  K.  tUi,  that  the  etficacy  of  bills  of  lad- 
ing to  pass  the  property  in  goods  is  derived. 

It  thus  appears  that  all  these  Instruments 
whlcli  are  said  to  have  derived  their  nego- 
tiability from  the  law  merchant  had  their 
origin,  and  that  at  no  very  remote  period. 
In  mercantile  asage,  and  were  adopted  Into 
the  law  by  our  <(iurt.s  as  being  in  conform- 
ity with  the  usages  of  trade;  of  which,  If  It 
were  needed,  a  further  confirmation  might 
be  found  In  the  fact  tliat,  according  to  the 
old  form  of  declaring  on  bills  of  exchange, 
the  decl.'iratlon  always  was  founded  on  tlie 
custom  of  merchants. 

Usages,  adopted  by  the  courts,  having  been 
thus  the  origin  of  the  whole  of  tlie  so-called 
law  merchant  as  to  negotiable  securities, 
what  is  there  to  prevent  our  acting  upon  the 
principle  acted  upon  by  our  predecessors, 
and  followed  In  the  precedents  they  have  left 
to  us?  Why  is  it  to  be  said  that  a  new 
usage,  which  has  sprung  up  under  altered 
circumstances,  Is  to  be  less  admissible  than 


the  usages  of  past  times?  Why  is  the  door 
to  be  now  shut  to  the  admission  and  adop- 
tion of  usage  in  a  matter  altogether  of  cog- 
nate character,  as  though  the  law  had  been 
llnally  stereotyped  and  settled  by  some  posi- 
tive and  peremptory  enactment?  It  is  true 
that  this  .scrip  purports,  on  the  face  of  it,  to 
be  a  security,  not  for  money,  but  for  the  de- 
livery of  a  bond;  nevertheless  we  tliiuk  that 
substantially  and  In  effect  it  is  a  security  for 
money,  which,  tijl  the^bpud  shall  be  deliv- 
^eiied.stamls'  in  the  place  of  that  document, 
which,  when  delivered,  will  be,  beyond  doubt, 
the  representative  of  the  sum  it  is  intended 
to  secure.  Suppose  the  possible  case  that 
the  borrowing  government,  after  receiving- 
one  or  two  instalments,  were  to  determine 
to  proceed  no  further  with  Its  loan,  and  to 
pay_back  to  the  lenders  the  amount  they  had 
already  advanced;  the  scrip,  with  its  re- 
ceipts, w.auld  be  the  security  to  the  holders 
for  the  amount  The  usage  of  the  money 
market  has  solved  the  question  whether  scrip, 
should  be  considered  security  for,  and  the 
reiiresentative  of,  money,  by  treating  it  as 
such.  The  univei-sallty  of  a  usage  volunta- 
rily adopted  between  buyers  and  sellers  is 
conclusive  proof  of  its  being  in  accordance 
with  public  convenience;  and  there  can  be 
no  doubt  that  by  holding  this  species  of  se- 
cm'ity  to  be  incapable  of  being  transferred 
by  delivery,  and  as  requiring  some  more  cum- 
brous method  of  assignment,  we  should  ma- 
terially hamper  the  transactions  of  the  mon- 
ey market  with  respect  to  it,  and  cause  great 
public  inconvenience.  No  doubt  there  is  an 
evil  arising  from  the  facility  of  transfer  by 
delivery,  namely,  that  it  occasionally  gives 
rise  to  the  theft  or  misappropriation  of  the 
security,  to  the  loss  of  the  ti'ue  owner.  But 
there  is  an  evil  common  to  the  whole  body 
of  negotiable  secmities.  It  is  one  which  may 
be  in  a  great  degree  prevented  by  prudence 
and  care.  It  is  one  which  is  counterbalanced 
by  the  general  convenience  arising  from  fa- 
cility of  transfer,  or  the  usage  would  never 
have  becoiiy,'  general  to  make  scrip  availa- 
ble to  bearer,  and  to  treat  it  as  transferable 
3y  delivery.  It  is  obvious  that  no -injustice 
s  done  to  one  who  has  been  fraudulently 
Jispovssessed  of  scrip  through  his  own  mis- 
placed confidence,  in  holding  that  the  prop- 
erty in  It  has  passed  to  a  bona  tide  holder  fov 
value,  seeing  that  he  himself  must  have 
known  that  it  purported  on  the  face  of  it  to 
be  available  to  bearer,  and  must  be  presumed 
to  have  been  aware  of  the  usage  prevalent 
with  respect  to  it  in  the  market  in  which  he 
purchased  It. 

Lastly,  it  Is  to  be  observed  that  the  tenden- 
cy of  the  courts,  except  only  in  the  time  of 
Lord  Holt,  has  been  to  give  effect  to  mer- 
cantile usage  in  respect  to  securities  for  mon- 
ey, and  that  where  legal  difficulties  have 
arisen  the  legislature  has  been  prompt  to  give 
the  necessary  remedy,  as  in  the  case  of  prom- 
ls.sory  notes  and  of  the  East  India  bonds. 
The  authorities  relied  on  on  the  part  of  plain- 


HISTORY  OF  NEGOTIABLE  INSTRUMENTS. 


15 


tifiE  do  not  appear  to  us  materially  to  con- 
flict with  tills  view.  In  Glyn  v.  Baker,  13 
East,  509,  which  was  an  action  to  recover 
India  bonds,  and  in  which  it  was  held  that 
such  bonds  did  not  pass  by  delivery,  the 
bonds  were  not  made  payable  to  bearer,  and 
there  was  a  total  absence  of  proof  that  they 
passed  by  delivery,  though  it  was  asserted 
by  counsel  in  argument  that  when  these 
bonds,  which  in  the  first  instance  wei'e  made 
payable  to  the  ti'easurer  of  the  company,  had 
been  indorsed  by  him,  they  were  afterwards 
negotiable,  and  passed  by  delivery  from  one 
to  another.  The  inconvenience  which  would 
have  arisen  from  this  decision  was  remedied 
by  the  immediate  passing  of  51  Geo.  III.  c. 
64,  by  which  bonds  of  the  East  India  Com- 
pany were  made  transferable  by  delivery. 
The  case  of  Partridge  v.  Bank  of  England, 
9  Q.  B.  39G,  15  Law  J.  (Q.  B.)  395,  and  which, 
amongst  other  things,  turned  on  the  negotia- 
bility of  dividend  warrants  of  the  Bank  of 
England,  is  not,  so  far  as  that  question  is 
concerned,  altogether  satisfactory,  as  the  de- 
cision turned  also  upon  other  points.  The 
bank  was  in  the  habit  of  paying  dividends 
to  those  entitled  to  them  by  warrants,  and  it 
was  pleaded  and  proved  that,  by  a  usage  of 
sixty  years  standing  of  the  bankers  and  mer- 
chants  of  London,  these  warrants,  which  are 
not  made  to  bearer,  were  nevertheless  nego- 
tiable as  soon  as  the  party  to  whom  thej' 
were  made  payable  had  annexed  to  them  the 
receipt  which  the  bank  required  before  pay- 
ment would  be  made.  Such  a  warrant  had 
been  obtained  by  an  agent  of  the  plaintiff 
authorized  to  receive  his  dividends,  and  had 
been  made  over  to  the  defendants  for  good 
consideration,  in  fraud  of  the  plaintiff,  so  far 
as  the  agent  was  concerned,  but  without 
knowledge  of  such  fraud  on  the  part  of  the 
defendants.  The  warrant  had  been  deliv- 
ered by  the  defendants  to  the  bank,  with 
whom  they  had  an  accoimt,  to  be  carried  to 
their  credit  in  the  cash  book  of  the  defend- 
ants, but  had  not  been  can-ied  to  the  draw- 
ing account.  The  court  of  queen's  bench 
held  this  proof  of  the  custom  to  be  a  good 
defense.  The  com't  of  exchequer  chamber 
reversed  their  judgment  on  the  ground, 
among  others,  that  the  custom  relied  on  was 
"rather  a  practice  of  trade  than  a  custom 
properly  so-called,  and  that  such  a  practice 
could  not  alter  the  law  according  to  which 
such  an  instrument  conferred  no  right  of  ac- 
tion on  an  assignee."  We  quite  feel  the 
force  of  this  distinction,  though  it  is  not 
quite  so  clear  in  what  sense  it  was  here  in- 
tended to  be  applied.  Possibly  what  was 
meant  was,  tliat  the  custom  applied  to  the 
warrants  of  a  particular  company,  and  there- 
fore could  not  form  the  subject  of  any  gen- 
eral mercantile  usage.  In  Dixon  v.  Bovill, 
3  Macq.  1,  where  the  note  was  "to  deliver  so 
much  iron  when  required  to  the  party  lodg- 
ing this  document  with  me,"  there  was  nei- 
ther a  promise  to  bearer,  nor  was  there  any 
proof  whatever  of  any  usage  whereby  such 


notes  were  dealt  with  as  negotiable.  The 
case  has  therefore,  with  reference  to  its  facts, 
no  bearing  on  the  present.  In  Crouch  v. 
Credit  Foncier  of  England,  L.  K.  8  Q.  B.  374, 
the  defendants,  a  limited  company,  had  is- 
sued bonds  payable  to  bearer,  "subject  to  the 
conditions  indorsed  on  this  dcbentm'e;"  and 
by  the  condition  so  indorsed  the  bonds  were 
to  be  paid  off  by  a  certain  number  being 
drawn  at  stated  periods;  in  which  respect, 
it  may  be  observed,  they  bore  a  close  re- 
semblance to  the  bonds  of  foreign  govern- 
ments when  loans  are  thus  raised  by  way  of 
bond.  A  bond  thus  made,  having  been  stolen 
from  the  lawful  owner,  and  having  been  pur- 
chased bona  fide  by  the  plaintiff  from  the 
thief,  was  drawn  for  payment  The  plain- 
tiff claimed  payment,  which  was  refused, 
whereupon  the  action  was  brought.  It  was 
there  held  by  three  judges  of  the  court  of 
queen's  bench  that  the  plaintiff  could  not  re- 
cover, first,  because,  even  assuming  that  a 
promise  to  pay  under  seal  could  be  consid- 
ered a  promissory  note,  here  the  conditions 
annexed  to  the  promise  took  away  that  char- 
acter from  tlie  instiument.  No  evidence  had 
been  offered  at  the  trial  as  to  whether  these 
or  similar  documents  were  in  practice  treat- 
ed as  negotiable,  nor  was  any  express  ad- 
mission made  as  to  the  point;  but  it  was  as- 
sumed, from  the  report  of  the  learned  judge 
before  whom  the  cause  was  ti'ied,  that  this 
had  been  tacitly  admitted.  But  it  was  said 
that,  these  instruments  having  been  only  of 
recent  introduction,  it  followed  tbat  such  cus- 
tom, to  whatever  extent  it  had  gone,  must 
also  have  been  quite  recent.  Under  these 
circumstances  the  court  held  that,  while  it 
was  incompetent  to  the  defendants,  as  an 
individual  company,  to  give  to  that  which 
was  not  a  negotiable  instrument  at  law  the 
character  of  negotiability  by  making  it  pay- 
able to  bearer,  the  custom  could  not  have 
that  effect,  because,  being  recent,  it  formed 
no  part  of  the  ancient  law  merchant.  For 
the  reasons  we  have  alreadj'  given,  we  cannot 
concur  in  thinking  the  latter  ground  conclu- 
sive. While  we  quite  agree  that  the  gi'eater 
or  less  time  during  which  a  custom  has  ex- 
isted may  be  immaterial  in  determining  how 
far  it  has  generally  prevailed,  we  cannot 
tliink  that,  if  a  usage  is  once  shewn  to  be 
universal,  it  is  "flie  less  eiititled  to  prevail 
because  it  may  ^t  have  formed  part  of  the 
law  merchant  as  previously  recognized  and 
adopted  by  the  courts.  It  is  obvious  that 
such  reasoning  would  have  been  fatal  to  the 
negotiability  of  foreign  bonds,  which  are  of 
comparatively  modern  origin,  and  yet,  ac- 
cording to  Gorgier  v.  Mieville,  3  Bara.  &  C. 
45,  are  to  be  treated  as  negotiable.  We  think 
the  judgment  in  Crouch  v.  Credit  Foncier, 
L.  R.  S  Q.  B.  374,  may  well  be  supported  on 
the  ground  that  in  that  case  there  was  sub- 
stantially no  proof  whatever  of  general  usage. 
We  cannot  concur  in  thinking  that,  if  proof 
of  general  usnge  had  been  established,  it 
would  have  been  a  sufficient  gi'ound  for  re- 


16 


HijiOhT  OF  NEGOTlAliLE  INJ^TKUME^lb. 


fusing  to  give  effect  to  it  that  it  did  not , 
form  part  of  what  is  called  •'the  ancient  law  i 
merchant."  I 

In  addition  to  tlie  cases  we  have  already 
referred  to,  in  which  usage  has  been  relied  ! 
on  as  making  mercantile  instruments  nego- 
tiable, the  case  of  Lang  v.  Smyth,  7  Bing.  | 
2S4,  was  cited  as  shewing  that  the  question,  I 
with  reference  to  instruments  of  this  de-  j 
scription.  turns  upon  how  far  the  particular 
instrument  has  by  usage  actjuired  the  qual- 
ity of  negotiability.  The  action  had  refer- 
ence to  Neai>olitan  bonds,  with  coupons  at- 
tached to  them,  which  latter  referretl  to  a 
certilicate.  The  plaintiff's  ag»nt.  being  in  pos- 
session of  the  coupons  belonging  to  the  plain- 
tiff, but  not  of  the  certilicate,  fraudulently 
pledged  the  coupons  with  the  defendant,  who 
took  them  bona  tide.  On  an  action  by  the 
plaintiff  to  recover  the  amount  received  by 
the  defendant  on  the  coupons.  Tindal,  C.  J., 
left  it  to  the  jiu'y  to  say  whether  the  coupons 
without  tlie  certificates  "passed  from  hand  to 
hand  like  money  or  bank  notes;"  in  other 
words,  "whether  they  had  acquired,  from  the 
course  of  dealing  pursued  in  the  city,  the 
character  of  bank  notes,  bills  of  exchange, 
dividend  warrants,  exchequer  bills,  or  other 
instruments  which  formed  ixirt  of  the  cur- 
rency of  this  country."  The  jury,  indeed, 
found  in  the  negative,  but  it  was  held  by  the 
court  of  common  pleas  that  the  question  had 
been  rightly  left  to  them.  If  the  iisage  had 
been  found  the  other  way,  and  the  court  had 
been  satisfied  with  the  verdict,  it  would  no 
doubt  have  been  upheld. 

We  must  by  no  means  be  understood  as 
saying  that  mercantile  usage,  however  ex-, 
tensive,  should  be"  allowed  to  prevail,  if  con- 
trary to  positive  law,  including  in  the  latter 
such  usages  as,  having  been  made  the  sub- 
ject of  legal  decision,  and  having  been  sanc- 
tioned and  adopted  by  the  courts,  have  be- 
come, by  such  adoption,  part  of  the  common 
law.  To  give  effect  to  a  usage  which  in- 
volves d  defiance  or  disregard  of  the  law 
would  be  obviously  contrary  to  a  fundamen- 
tal principle.  And  we  quite  agree  that  this 
would  apply  quite  as  strongly  to  an  attempt 
to  set  up  a  new  usage  against  one  which  has 
become  settled  and  adopted  by  the  common 


law  as  to  one  in  conflict  with  the  more  an- 
cient rules  of  tlie  common  law  itself.  Thus, 
it  having  btvu  derided  in  the  two  cases  of 
More  V.  Manning,  1  Comyu.  311,  and  Acheson 
v.  Fountain,  1  Strange.  .">7,  that  when  a  bill 
of  exchange  was  indorsed  to  A.  B.,  without 
the  words  "or  order,"  the  bill  w;as  neverthe- 
less assignable  by  A.  B.  by  fm-ther  indorse- 
ment. Lord  Mansfield  and  the  comt  of  king's 
bench,  in  the  case  of  Edie  v.  East  India 
Co..  '2  Burrows.  1210.  held  that  evidence  of  a 
contrary  usage  was  inadmissible.  In  like 
manner,  in  Grant  v.  Vaughan,  3  Burrows, 
151G,  where  a  cash  note  payable  to  bearer 
had  been  lost  by  the  owner,  but  had  been 
taken  by  the  plaintiff  bona  fide  for  value,  on 
an  action  on  the  note  by  the  latter  against 
the  maker.  Lord  Mansfield  having  left  it  to 
the  jiuy  to  say  "'whether  such  drafts  as  this, 
when  actually  paid  away  in  the  course  of 
trade  dealing  and  business,  were  negotiable 
or  in  fact  and  practice  negotiable,"  and  the 
jury,  influenced  no  doubt  by  the  natural  de- 
sire to  protect  the  owner  of  the  note,  hav- 
ing found  for  the  defendant.  Lord  Mansfield 
and  the  court  here  again  set  the  verdict  aside, 
on  the  ground  that,  the  law  having  been  set- 
tUnl  by  former  decisions  that  notes  payable 
to  bearer  passed  by  delivery  to  a  bona  fide 
holder,  the  judge  ought  to  have  directed  a 
verdict  for  plaintiff. 

If  we  could  see  our  way  to  the  conclusion 
that,  in  holding  the  scrip  in  question  to  pass 
by  delivery,  and  to  be  available  to  bearer., 
we  were  giving  effect  to  a  usage  incompati- 
ble either  with  the  common  law  or  with  the 
law  merchant  as  incorporated  into  and  em- 
bodied in  it,  our  decision  would  be  a  very 
different  one  from  that  which  we  are  about 
to  pronounce.  But,  so  far  from  this  being 
the  case,  we  are,  on  the  contrary,  in  our  opin- 
ion, only  acting  on  an  established  principle 
of  that  law  in  giving  legal  effect  to  a  usage, 
now  become  universal,  to  treat  this  form  of 
security,  being  on  the  face  of  it  expresslj- 
made  ti-ansferable  to  bearer,  as  the  repre- 
sentative of  money,  and.  as  such,  being  made 
to  bearer,  as  assignable  by  delivery.  This 
being  the  conclusion  at  which  we  have  ar- 
rived, the  judgment  of  the  court  of  exchequer 
will  be  athrmed.     Judgment  affirmed. 


PKOMLSSOKY  NOTE— WHEX  NEGOTIABLE. 


i: 


HOPKINS  et  al.  v^'^AN  ZANDT. 

(40  111.  App.  635.) 

Appellate   Court  of  Illinois.     .June  2,   1891. 

Error  to  circuit  court,  Cook  county;  Kirk 
Hawes,  Judge. 

The  declaration  in  this  action  was  the 
ordinary  form  in  assumpsit  upon  a  nego- 
tiable promissory  note,  with  count  for  lirst 
indorsee  against  makers  and  the  common 
counts. 

The  pleas  were  non  assumpsit,  a  plea  of 
failure  of  consideration,  setting  up  that  the 
note  was  given  to  Schuler,  the  payee  named 
therein,  for  purchase  of  certificate  No.  113, 
for  fifty  shares  of  stock  in  Hopkins  Manu- 
facturing Company,  in  case  Schuler  should 
wish  to  sell  at  maturity  of  note;  that  the 
certificate  was  never  delivered  nor  tendered; 
and  a  plea  alleging  the  execution  was  ob- 
tained by  fraud,  covin,  and  deceit. 

The  instrument  declared  on  and  admitted 
in  evidence  is  as  follows: 
"$5,000.  Chicago,  August  lo,  1SS2. 

"On  the  first  day  of  .July  next  after  date, 
we  promise  to  pay  to  the  order  of  11.  B. 
Schuler,  five  thousand  dollars,  at  the  Com- 
mercial Nat.  Bank,  with  interest  at  six  per 
cent,  per  annum.     Value  received. 

"Harvey  L.  Hopkins. 
"Daniel  B.  Whitacre. 
"Wm.  F.  Tucker. 


"No. 


Due 


"Qi£i  of  stock  No.  113  for  .^U  shares  of 
stock  in  the  Hopkins  Mfg.  Co.,  to  be  surren- 
<iered  on  payment  of  this  note." 

Indorsed:  "I'ay  to  the  order  of  Ueorge 
Van  Zandt.  H.  B.  Schuler." 

The  case  was  tried  by  the  court  without  a 
jnry. 

The  defendants  introduced  evidence  tend- 
ing to  show  that  lio  iiipuey^or  thing  of  value 
passed  from  Schuler  to_  either  one  of  the 
<jiakfij.:g  of  the  note;  that  said  Schuler  had 
^bscribed  for  certain  shares  of  stock  in  the 
Hopkins  Manufacturing  Company,  but  re- 
■  fused  to  pay  for  the  same  unless  the  niakers, 
who  were  directors  of  the  comp.iny,  :svould 
undertake  to  relieve  him  of  the  stock  within 
a  year.  He  was  to  deliver  up  the  stock  in 
case  he  chose  to  insist  on  pajment  of  the 
note.  To  show  this  understanding,  the 
Biemorandum  was  afiixed  to  the  note  beXuiie 
.signing.  The  certificate  of  stock  No.  113 
was  never  the  property  of  the  makers  of 
the  note. 

The  following  propositions  of  law  were 
asked  by  the  defendants: 

(1)  Defendants,  Hopkins  and  Tucker,  ask 
the  court  to  hold,  as  a  proposition  of  law, 
that  the  memorandum  at  the  foot  of  said 
supposed  note  was  and  is  a  component  part 
of  the  contract  entered  into  by  the  parties 
to  said  note. 

Held,  to  this  extent,  Ihat  l)efore  judgment 
entered  plaintiff  must  surrender,  or  offer  to 
surrender,  certificates  of  stock  in  question. 
BAKK.B.&  N.-2 


(2)  Said  defendants  further  ask  the  court 
to  hold  that  the  obligation  to  pay  the  sum 
of  .'}:."),000  and  interest  was  and  is  no  more 
binding  on  the  signers  of  said  note  than  was 
and  is  the  obligation  of  the  holder  thereof 
to  surrender  said  stock  certificate  described 
in  sai<l  memorandum. 

Held,  to  this  extent,  that  before  judgment 
entered  plaintiff  must  surrender,  or  olTer  to 
surrender,  the  certificate  of  stock  in  ques- 
tion. 

(3)  Said  defendants  further  ask  the  court 
to  hold  that  the  money  named  in  said  note 
was  not  payable  absolutely,  and  without 
condition,  upon  the  3^  of  July,  1.SS3,  under 
the  terms  of  the  contract  between  the  payee 
and  signers  of  said  note. 

Refused.     Exception  by  defendants. 

(4)  Said  defendants  further  ask  the  court 
to  hold  that  the  placing  of  said  memoran- 
dum at  the  foot  of  said  note  liefore  the 
signing  thereof  rendered  said  note  unnego- 
tiable. 

Refused.     Exception  by  defendants. 

(5)  Said  defendants  further  ask  the  court 
to  hold  that  the  said  supposed  note  is  not. 
and  never  wa.s,  a  negotiable  instrument. 

Itefused.     Exception  by  defendants. 

(6)  Said  defendants  further  ask  the  court 
to  hold  that  the  plaintiff.  (Jeorge  Van  Z.mdt, 
has  not  shown  any  legal  title  to  said  sup- 
posed cause  of  action  set  up  in  plaintitTs 
declaration. 

Refused.     Exception  by  defendants. 

7.  Said  defendants  further  ask  the  conn 
to  hold  that  said  George  Van  Zandt  is  not 
entitled  to  maintain  this  action  in  his  own 
name. 

Refused.     Exception  by  defendants. 

I'Mnding  for  plaintiff',  and  damages  as- 
sessed at  .$0,018. 

Exception  by  defendants. 

C.  C.  Bonney  and  L.  M.  Paine,  for  plaintiff.-^ 
in  error.  Howard  Henderson,  for  defend- 
ant in  error. 

MORA^N,  P^jL  Plaintiffs  in  error  contend 
that  the  Tnstrujnent  sued  on  is  not  a  nego- 
tiable promissory  note,  but  is  a  mere  chose 
in  action,  the  money  mentioned  therein  p^y- 
jiXAe  only  on  the  condition  of  compliance 
with  the  memorandum  at  the  foot  of  the 
note.  We  are  of  opinion  that  this  position 
is  correct.  It  is  "a  requisite  of  commercial 
paper  that  it  must  be  payable  absolutely, 
and  at  all  events.  If  the  payment  is  made 
to  be  dependent  upon  any  contingent  event, 
the  instrument  ceases  to  be  commercial  pa- 
per. In  order  to  be  negotiable,  the  pay- 
ment must  be  unconditional."  Tied.  Com. 
Paper,  §  25;   Gillilan  v.  Meyei-s,  31  III.  525. 

.^jijLjQ.iemoi'andum  designed  to  control  the 
operation  of  the  note,  written  on  any  part  of 
its  face,  "within  the  ?our  corners  thereof," 
will  constitute  a  part  of  it,  and  in  con.struing 
the  legal  effect  and  determining  the  charac- 
ter  of   the   instrument   such    memorandum 


^^ 


18 


PROMlSSOliY  NOTE— WHEN  NEGOTIABLE. 


must  be  considered  in  connection  with  the 
rest  of  the  writing?. 

This  is  establi.slied  by  all  the  text-books 
on  the  subject  of  negotiable  instruments, 
and  by  numerous  adjudged  cases  abundant- 
ly cited  in  the  brief  for  phiintiffs  in  error. 
See  C'ostcUo  v.  Crowell.  127  Mass.  293:  Blake 
V.  Coleman,  22  Wis.  41G;  Cook  v.  Kelsey,  19 
N.  Y.  415;   Prins  v.  Lumber  Co.,  20  111.  App. 

Heading  the  memorandum  on  the  instru- 
ment in  suit,  in  connection  Avitli  the  rest  of 
the  writing,  it  shows  that  the  surrender  of 
the  certificate  of  stock  mentioned  therein 
is  to  be  made  on  payment  of  tlie  note.  Sur- 
render or  readiness  to  surrender  the  stock 
certificate  must  necessarily  be  alleged  and 
proved  in  order  to  entitle  the  payee  to  re- 
cover on  the  instrument.  The  payment  of 
the  money  and  the  surrender  of  the  stock 
are  to  be  contemporaneous  acts,  and  the 
performance  of  the  one  can  not  be  required 
without  the  performance  of  the  other  or  an 
offer  to  perform  it. 

The  money,  then,  is  not  to  be  paid  abso- 
lutely, but  only  on  the  surrender  of  the 
stock  certificate,  and  so  the  writing  lacks 
that  element  necessary  to  negotiability,  to 
wit,  payment  at  all  events  of  a  sum  certain, 
at  a  time  certain. 

In  Consederant  v.  Brusbane,  14  How.  Prae. 
4,s7,  the  note  sued  on,  read: 

"New  York,  March  1.  18.55. 

"On  the  1st  day  of  July,  1S"><!.  I  promise  to 
pay  to  V.  Consederant,  as  executive  agent 
of  the  Companj-  Bureau,  Guillon,  Goden  & 
Co.,  the  sum  of  five  thousand  dollars,  for 
which  I  am  to  receive  stock  of  said  com- 
pany, known  as  premium  stock,  to  the 
amount  of  five  thousand  dollars,  value  re- 
ceived." 

The  court  said:  "Where  an  instrument  in 
the  form  of  a  promissory  note  in  other  re- 
spects states  the  consideration  of  it,  and 
that  such  consideration  had  not  been  re- 
reived,  and  also  states  or  clearly  implies 
tliat  it  is  to  be  transferred  when  the  money 
is  to  be  paid,  such  money  is  not  payable  un- 
less a  tender  of  the  consideration  is  made, 
and  therefore  tlie  money  is  not  payable  ab- 
solutely and  at  all  events."  See,  also, 
Fletcher  v.  Thompson,  5.j  N.  H.  3()8. 

In  Cook  v.  Saterlee,  G  Cow.  108,  which  is 
cited  with  approval  in  Gillilan  v.  Meyers,  su- 
pra, the  action  was  on  an  accepted  bill  of 
exchange,  in  which  the  acceptors  were  di- 
rected to  p.ny  the  plaintiff  the  sum  of  ?400, 
and  take  up  the  drawer's  note  of  a  certain 
date  licld  by  the  payee  for  that  amount. 
The  court  said:  "The  payment  of  the  mon- 
ey and  taking  up  the  note  must  be  simul- 
taneous acts.  The  acceptors  could  not  take 
up  the  note  until  it  was  presented,  nor  were 
they  bound  to  pay  the  money  until  the 
plaintiff  was  ready.  The  instrument  was 
payable  on  a  contingency,  and  is  the  same 
aa  if  it  had  been  said:  'Pay  W.  C.  ^X)  on 
his  giving  up  our  note.'  "     See,  also,  Smilie  v. 


I  Stevens,  39  Vt.  315;    Benedict  v.  Cowdon,  49 

I  N.  Y.  390. 

Defendant  in  error  contends  that  the  mem- 

]  orandum  on  this  note  must  be  read  as  re- 

i  ferriug  to  gollateral  security;  i.  e.  that  the 
stock  to  be  surrendered  was  held  as  collat- 

!  eral  security  for  the  note.  We  cannot  as- 
sent to  this  contention.  There  is  no  allu- 
sion in  the  writing  to  security  or  to  collater- 
al.    The  certificate  of  stock  is  to  be  surren- 

,  dered  or  delivered,  but  there  is  nothing  from 
which  we  can  infer  that  such  surrender  is  a 

I  mere  restoring  or  return  to  former  holders 

'  or  owners  of  the  said  certificate. 

I      The  memorandum  is  not  ambiguous.  True, 

I  it  does  not  state  at  length  the  reasons  for 

;  its   being   written,   and   that   was   unneces- 

i  .sary.     It  plainly  specifies  what  the  payee  is 

j  to  do  when  the  money  is  paid,  and  that  is 

.  sufficient. 

\  The  instrument  is  not  negotiable,  and  this 
action  can  not  be  maintained. 

I      The  judgment  will  therefore  be  reversed. 
Judgment  reversed. 

NOTE.  On  appeal  to  the  supi:eme  court 
in  the  above  case  (Van  Zandt  v.  Hopkins, 
151  111,  252,  37  N.  R  846),  Mr.  Justice  Baker 
said: 

"We  see  no  escape  from  the  conclusion 
that  the  negotiability  of  the  instrument 
must  be  determined  precisely  as  though 
those  words  in  the  memorandum  had  been 
written  over  the  signature  of  appellees. 
*  *  ♦  The  transaction  was  a  purchase  of 
the  certificate  of  stock  to  be  delivered  si- 
multaneously with  the  payment  of  the  mon- 
ey. That  is  to  say.  the  money  was  to  be 
paid  upon  the  contingency  of  the  readiness 
and  ability  of  the  payee  to  deliver  the  cer- 
tificate of  stock,  and  that  fact  destroyed 
its  negotiability. 

"It  was  said  in  Kingsbury  v.  Wall,  68  111. 
311:  'It  is  indispensable  that  all  bills  of  ex- 
change or  promissory  notes,  to  be  assign- 
able under  our  statute  or  at  common  law, 
^luaf  be  certainly  payable,  and  not  depend- 
ent on  any  contingency,  either  as  to  the 
event  or  the  ^und  out  of  which  payment  is 
to  be  made,  or  parties  by  or  to  whom  pay- 
ment is  to  be  made.'    *    *    * 

"When  the  memorandum  is  read  into  the 
body  of  this  instrument,  it  becomes  a  con- 
tract between  the  party  to  whom  it  is  made 
payable  and  those  who  signed  it  that  the 
latter  would  pay  the  former  the  sum  of 
money  mentioned,  and  that  he  at  the  same 
time  would  deliver  to  them  the  certificate  of 
stock." 

The  rule  thus  announced  is  in  harmony 
with  all  the  authorities. 

Any  language  put  upon  any  portion  of  the 
face  or  l>ack  of  a  promissory  note,  which 
has  relation  to  the  subject-matter  of  the 
note,  by  the  maker  of  it,  before  delivery,  is 
a  part  of  the  contract.,  Leeds  v.  Lanca- 
shire, 2  Camp.  205;  Johnson  v.  Heagan,  23 
Me.  329;    Ueywood  v.   Perrin,   10  Pick.  228; 


PROMISSORY  NOTE— WHEN  NEGOTIABLE. 


19 


Wheelock  v.  Freeman,  13  Pick.  165;  Manu- 
facturing Co.  V.  Parr,  8  Neb.  379,  1  N.  W. 
312;  2  Pars.  Notes  &  B.  p.  539;  1  Daniel, 
Neg.  Inst.  §  149;  1  Rand.  Com.  Paper,  129; 
Chit,  Bills,  155;  ByJes,  Bills,  100;  Norton, 
Bills  &  N.  34,  3G-3S. 

A  promissory  note  must  be  payable  abso- 
lutely, and  at  all  events,  and  not  depend  on 
ji  contingency,  in  order  to  come  within  the 
•definition  of  a  promissory  note,  so  as  to  be 


negotiable.  Lowe  v.  Bliss.  24  111.  108;  Mc- 
Clellan  v.  Coffin.  93  lud.  45G;  Kelley  v.  Hem- 
mingway,  13  111.  (HH;  Smalley  v.  Edey.  15 
111.  324;  Bank  v.  McCrea,  100  111.  2S1;  Beez- 
ley  V.  .Tones,  1  Scam.  34;  U ill i Ian  v.  Myers, 
31  111.  525;  Hunt  v.  Divine.  37  111.  137;  Hus- 
band V.  Epling.  81  111.  172;  Baird  v.  Under- 
wood, 74  111.  170;  Story,  Prom.  Notes,  §  22; 
1  Daniel,  >eg.  Inst.  §§  41,  45;  1  Pars.  Notes 
&  B.  p.  48;    Norton,  Bills  &  N.  34,  30-38. 


20 


NOTE— DEFINITION— ATTORNEY'S  FEES. 


DOUSE Y  V.  WOLFF. 

(32  N.  E.  495.  142  1]!,  5S9.) 

Supreme  Court  of  Illinois.     Nov.  2,  1892. 

WOLFF  V.  DORSEY. 

(3S  111.  App.  305.) 

Appellate  Court  of  Illinois.     Nov.  21,  1890. 

(32  N.  E.  495,  142  111.  589.) 

Appeal  from  appellate  court,  Third  district; 
Phillips,  Judge. 

Assumpsit  by  Marcus  A.  Wolfif  agaiust  Wil- 
liam M.  Dorsey.  Tlaiutiff  obtainotl  juds- 
ineut,  which  was  affirmed  by  the  appellate 
lourt.  ronding  appeal,  plaintiff  died,  and 
Eliza  Wolff,  his  administratrix,  was  substi- 
tuted as  appellee.  Defendant  appeals.  Af- 
firmed. 

This  is  an  action  of  assumpsit  besun  in  the 
circuit  court  of  Macoupin  county  on  May  IG, 
1S89,  by  Marcus  A.  Wolff  against  the  appel- 
lant, Dorsey,  to  recover,  as  attorney's  fees, 
the  sum  of  10  per  cent,  upon  the  amount 
found  to  be  due  upon  the  promissory  notes 
hereinafter  mentioned,  in  a  suit  theretofore 
brought  upon  said  notes.  The  defendant  de- 
murred to  the  declaration.  The  demurrer 
was  overxnded.  .The  defendant  excepted  to 
the  order  overruling  the  demurrer,  and  elect- 
ed to  stand  by  his  demurrer.  Thereupon 
plaintiff's  damages  were  assessed  at  $1,G19, 
and  judgment  was  rendered  in  his  favor  for 
that  amount.  The  judgment  has  been  affirm- 
ed by  the  appellate  coiu-t,  from  which  latter 
court  the  case  is  brought  here  by  appeal. 

The  declaration  sets  up  three  notes.,  exe- 
cuted by  the  defendant,  William  M.  Dorsey, 
dated  December  31,  1885,  payable  to  the  or- 
der of  George  W.  Belt,  at  the  banking 
house  of  Bolt  Bros.  &  Co.,  in  Bunker  Hill, 
111.,— the  first  for  $13,580.84,  on  or  before  two 
years  after  date;  the  second  for  |.")43.47,  on 
or  before  eighteen  months  after  date;  and 
the  third  for  .$543.47,  on  or  before  two  years 
after  date, — each  of  which  notes,  after  the 
maker  promises  for  value  received  ttj  pay  the 
amount  therein  named  to  the  order  of  said 
Belt,  contains  the  following  words:  "With 
eight  per  cent,  interest  per  annum  after  ma- 
turity, and,  if  not  paid  when  due  and  suit  is 
brought  thereon,  thou  we  promise  to  pay  ton 
per  cent,  on  the  amount  due  hereon  in  addi- 
tion jis  an  attorney's  fee,  and  to  bo  recovered 
as  part  of  this  note,  or  by  separate  suit." 
By  the  terms  of  each  note,  also,  the  makers 
and  indorsors  waive  prosentmont  for  pay- 
ment protest,  and  notice,  etc.  The  declara- 
tion then  avoi-s  that  Dorsey  delivered  said 
notes  to  Belt,  and  Belt  indorsed  the  same  to 
plaintiff,  etc.;  that  said  notes  were  not  paid 
when  due;  that  suit  was  brought  thereon; 
that  the  said  10  per  cent,  was  not  paid  be- 
fore or  after  said  suit  was  brought,  and  was 
not  recovered  in  said  suit  so  brought  upon 
said  notes  as  a  pait  thereof,  etc.  One  of  the 
counts;,  in  addiiion  to  the  foregoing  aver- 
ments, alleges  that,  after  the  maturity  of  the 


notes,  they  were  placed  in  the  hands  of  an 
attorney  for  suit;  that  suit  was  brought  there- 
on, and,  the  10  per  cent,  attorney's  fee  not 
having  been  j-ecovered  therein,  the  plaintiff, 
before  the  bringing  of  llie  present  suit,  paid 
his  attorney  for  his  services  in  said  formei- 
suit  the  said  sum  of  $1,619.20. 

Palmer  &  Shutt,  for  appellant.  A.  N.  Yan- 
cey, for  appellee. 

MAGRUDER,  J.  (after  stating  the  facts). 
The  main  question  presented  by  the  as- 
signments of  error  is  whether  or  not  the 
notes  lU'scribod  in  the  declaration  are  ne- 
gotiable instruments.  It  is  claimed  by  the 
appellant  that  the  notes  are  made  nonnogo- 
tiaLle  lay  the  insertion  therein  of  the  written 
promise  of  the  maker  that,  if  they  were  not 
paid  when  due  and  suit  was  brought  tnere- 
on,  he  would  pay  10  per  cent,  on  the  amount 
duo  thereon  in  addition,  as  an  attorney's  fee, 
and  to  bo  recovered  as  a  part  of  the  notes,  or 
by  separate  suit;  that  the  indorsements  by 
the  payee  did  not  confer  the  right  upon  the 
indorsee  to  bring  suit  in  his  own  name  up- 
on the  notes;  that,  even  if  such  indorsements 
should  be  held  to  have  conferred  upon  the 
assignee  the  right  to  bring  a  suit  upon  the 
notes  in  his  own  name,  it  did  not  confer  upon 
such  assignee  the  right  to  bring  a  separate 
suit  upon  the  stipulations  or  promises  as_ti> 
the  attorney's  fee. 

Various  definitions  have  been  given  of  a 
"promissory  noje."  In  general  terms,  it  may 
be  dofinocTToTje'a  written  promise  by  one  per- 
son to  pay  to  anotheiiL-iierson  therein  named^ 
or  order  a  fixed  sunTof  money,  at  all  events, 
and  at  a  time  specified  therein,  or  at  a  time 
which  must  certainly  ai'rive.  Lowe  v.  Bliss, 
24  111.  168;  Chicago  Railway  Equipment  Co. 
V.  Merchants'  Bank,  136  U.  S.  2158,  10  Sup. 
Ct.  999;  Story,  Prom.  Notes,  p.  2;  3  Kent, 
Comm.  74;  2  Am.  &  Eug.  Enc.  Law,  p.  314. 
A  note  is  none  the  less  negotiable  because 
it  is  made  payable  on  or  before  a  named  date. 
Chicago  Railway  Equipment  Co.  v.  Mer- 
chants' Bank,  supra;  Cisne  v.  Chidester,  85 
111.  523;  Ernst  v.  Stockman,  74  Pa.  St.  13. 
An  instriiment  for  a  specified  sum  of  money, 
and  also  for  the  payment  of  something  else, 
the  value  of  which  is  not  ascertained,  but  de- 
ponds  upon  extrinsic  evidence,  is  not  a  note. 
Lowe  V.  Bliss,  supra.  A  note  which  provides 
for  the  payment,  after  the  maturity  thereof, 
of  a  certain  rate  of  interest  per  annum,  not 
exceeding  the  legal  rate,  is  not  made  condi- 
tional by  svich  provision.  Houghton  v.  Fran- 
crs,"29  111.  244;  Reeves  v.  Stipp,  91  111.  609; 
Laird  v.  Warren,  92  111.  204. 

Applying  those  definitions  to  the  notes 
mentioned  in  the  declaration  in  this  case, 
we  find  that  each  note  is  "a  note  for  a  sum 
certain,  payable  at  a  fixed  date."  Dietrich 
V.  Bay  hi,  23  La.  Ann.  767.  The  notes  are 
not  payable  on  a  contingency,  because  the 
maker  has  the  option  of  paying  on  or  before 
a  certain  date;  nor  are  they  conditional  in- 
strumouts   because  tliey   contain   the   words, 


NOTE— DEilNITlOX— ATTORNEY'S  FEES. 


21 


"with  eight  per  cent,  interest  per  annum  aft- 
er maturity."  The  portion  of  each  note 
which  precedes  the  stipulation  or  promise  as 
to  the  attornej^'s  fee  is  in  itself  a  complete 
promissory  note.  For  example,  the  part  of 
the  first  note  that  goes  before  the  provision 
for  the  fee  is  as  follows:  "$13,580.84.  Bun- 
ker Hill,  Ills.,  Dec.  31st,  1885.  On  or  be- 
fore two  years  after  date,  for  value  received, 
we  or  either  of  us  promise  to  pay  to  the  or- 
der of  George  W.  Belt,  thirteen  thousand  five 
hundred  eighty-six  and  84-100  dollars,  paya- 
ble at  the  banking  house  of  Belt  Bros.  &  Co. 
in  Bunker  Hill,  Illinois,  with  eight  per  cent, 
interest  per  annum  after  maturity,"  etc. 
"Here  the  sum,  time  of  payment,  and  payee 
are  certain,  and  these  are  the  essential  char- 
acteristics of  a  promissory  note."  Houghton 
V.  Francis,  supra.  The  promise  to  pay  the 
attorney's  fee  is  a  promise  to  do  something 
a?ter  the  note  matm'es.  It  does  not  affect 
the  character  of  the  note  before  or  up  to  the 
time  of  its  maturity,  either  as  to  certainty  In 
the  amount  to  be  paid,  or  fixedness  in  the 
date  of  payment,  or  definitoness  in  the  de- 
scription of  the  person  to  whom  the  payment 
is  to  be  made.  The  .stipulation  or  promise  as 
to  the  attorney's  fee  cauopt,  therefore,  affect 
the  negotiability  of  the  note,  because  the  ne^ 
gotiaMity  of  a  promissory  note  is,  for  all 
^^ctical  purposes,  at  an  end  wlien  it  ma- 
tures. Parties  taking  it  after  its  matm-ity 
cannot  claim  to  be  innocent  holders  without 
notice  of  defenses  which  may  bo  set  up  by 
the  maker  against  its  collection.  If  the  stip- 
ulation for  an  attorney's  fee  is  of  such  a  char- 
acter as  to  make  the  amount  to  be  paid  at 
maturity  uncertain  or  indefinite,  the  note 
cannot  be  regarded  as  negotiable  so  as  to  au- 
thorize a  suit  upon  it  by  the  indorsee;  but, 
whei'e  the  stipulation  does  not  have  such  an 
effect,  its  insertion  in  the  note  does  not  de- 
stroy the  negotiability  of  the  note. 

When  the  amount  to  be  paid  at  maturity 
is  certain  and  fixed,  the  maker  knows  what 
he  has  to  pay,  and  the  holder  knows  what  he 
is  to  receive,  from  the  face  of  the  note  itself. 
Commei-cial  paper  is  expected  to  be  paid 
prompily  wheu  it  is  due.  A  stipulation  for 
an  attorney's  fee,  which  is  only  to  be  recov- 
ered if  the  note  is  not  paid  when  due  and  suit 
is  brought  upon  it,  can  have  no  force  except 
upon  the  maker's  default.  If  he  keeps  his 
contract  by  paying  his  note  at  its  maturity, 
he  will  not  be  obliged  to  pay  the  additional 
amount;  and  no  element  of  luicertainty  en- 
ters into  the  contract.  By  the  stipulation,  the 
maker  offei-s  to  the  holder  an  assurance  of 
his  own  confidence  in  his  ability  to  pay  with- 
out suit,  and  thereby  adds  to  the  value  of 
the  paper  as  promising  less  expense  in  its 
collection.  It  has  been  said  that  "the  addi- 
tional agreement  relates  rather  to  the  reme- 
dy upon  the  note,  if  a  legal  remedy  be  pur- 
sued, than  to  the  sum  which  the  maker  is 
bound  to  pay;  and  that  it  is  not  different  in 
its  character  from  a  cognovit,  which,  when 
attached  to  promissory  notes,   does  not  de- 


stroy their  negotiability."  Daniel,  Neg.  Inst. 
(4th  Ed.)  §§  G2,  02a.  We  do  not  think  that 
the  negotiability  of  the  notes  in  this  case  w^ 
4£5t^oyed  by  the  stipulations  therein  as  to 
attorneys'  fees. 

The  view  here  expressed  is  sustained  by 
the  authorities.  In  Nlckei-son  v.  Sheldon.  33 
111.  372.  the  note  contaiiu'd  this  provision; 
"And  we  fm'tlier  agive,  if  the  above  note  is 
not  paid  without  suit,  to  pay  ten  dollars,  in 
addition  to  the  above,  for  attorneys'  fees." 
In  that  case  the  plaintiff  did  not  declare  for 
the  $10,  and  hence  the  recovery  was  only  for 
the  principal  and  interest  due  on  the  note, 
but  we  held  the  note  to  be  negotiable  under 
the  statute,  and  siild:  "The  amount  due  by 
this  note  is  absolutely  certain,  and  it  posses- 
ses all  the  requisites  of  a  negotiable  instni- 
ihent  under  the  statute.  Stewart  v.  Smith. 
28  111.  307.  There  is  no  imcertainty  as  to 
the  precise  sum  of  money  to  be  paid  on  the 
maturity  of  the  note."  Bane  v.  Gridley,  G7 
111.  388;  Gobble  v.  Linder,  7G  111.  157;  Barton 
V.  Bank.  122  111.  3.52,  13  N.  E.  503.  In  Stone- 
man  V.  Pyle,  35  Ind.  103,  the  note  contained 
a  stipulation  for  the  payment  of  attorneys' 
fees  should  suit  be  instituted  thereon,  and  it 
was  said:  "We  see  no  reason,  on  principle  or 
authority,  or  on  grounds  of  public  policy,  for 
holding  that  such  a  stipulation  destroys  the 
commercial  character  of  paper  otherwise  hav- 
ing that  character.  •  •  ♦  So  here  the 
defendant  had  the  right  to  pay  the  face  of  the 
note  when  due.  and  avoid  the  attorneys'  fees. 
As  long  as  the  note  retained  the  peculiar 
characteristics  of  commercial  paper,  viz..  U£ 
t2.the_timc  of  its  maturity  and  dishonor,  the 
amount  to  be  paid  on  the  one  hand,  and  re- 
covered on  the  other,  was  fixed  and  definite." 
Smock  v.  Ripley,  (!2  Ind.  81.  In  Gaar  v. 
Banking  Co.,  11  Bush,  180,  there  was  in- 
dorsed upon  the  back  of  an  accepted  bill  of 
exchange  an  agreement  by  the  drawers.  In- 
dorsers,  and  acceptors  thei'cof  "to  pay  a  rea- 
sonable attorney's  fee  to  any  holder  thereof 
if  the  same  shall  hereafter  be  sued  upon,  and 
also  pay  interest  at  the  rate  of  ten  per  cent 
per  annum  after  maturity  imtil  paid;"  and  it 
was  claimed  that  the  written  agreement  so 
indorsed  upon  the  bill  destroyed  its  negotia- 
bility on  the  ground  that  the  amount  of  the 
attorney's  fee  was  not  ascertained,  and  hence 
that  the  bill  was  for  an  uncertain  amount; 
but  the  court  held  otherwise,  and  said:  "The 
amount  to  be  paid  at  maturity  was  fixed  and 
certain,  and  it  was  only  in  the  event  that  the 
bill  was  not  paid  when  due  that  any  uncer- 
tainty arose.  The  reason  for  the  rule  that 
the  amount  to  be  pai^must  In-  fixed  and  cer- 
tain is  that  the  paper  is  to  ln'come  a  sul>sti- 
tute  for~inoney.  and  this  it  cannot  be,  unless  It 
can  be  ascertaineTfrom  it  ex;|ctly  how  much 
money  it  i-epresents.  As  long,  therefore,  as 
it  remains  a  substitute  for  money,  the  amount 
which  it  entitles  the  holder  to  demand  must 
be  fixed  and  certain;  but  when  it  Is  past  due 
it  ceases  to  have  that  pi-culiar  tpiality  de- 
nominated 'negotiability,'  or  to  perform  the 


NOTE- DEFINITION- ATTORNEY'S  FEES. 


office  of  money;  and  hence  auythiu.::  which 
only  renders  its  amount  uncertain  after  it 
has  ceased  to  be  a  substitute  for  money,  but 
which  in  no  wise  affected  it  until  after  it  had 
performed  its  office,  cannot  prevent  its  be- 
coming negotiable  paper."  In  Seaton  v. 
Scovill.  IS  Kan.  433.  a  note  for  the  payment 
of  a  certain  sum,  "with  interest  at  twelve  per 
cent,  per  annum  after  due  until  paid,  also 
costs  of  collectins,  including  reasonable  at- 
torneys' fees  if  suit  be  instituted  on  this 
note."  was  held  to  be  negotiable;  and  Mr. 
Justice  Brewer,  delivering  the  opinion  of  the 
court,  quoted  with  approval  the  above  extract 
from  the  Kentucky  case,  and  said:  "The 
amount  due  at  the  maturity  of  the  paper  is 
certain;  and  the  only  uncertainty  is  in  the 
amount  which  shall  be  collectible  in  case  the 
maker  defaults,  at  the  maturity  of  the  paper, 
in  his  promise  to  pay,  and  the  holder  is  driv- 
en to  the  necessity  of  instituting  a  suit  for 
collection,  and  then  only  as  to  the  expenses 
of  such  collection."  In  Sperry  v.  Horr,  32 
Iowa,  1S4,  each  of  the  notes  sued  xipon  was 
for  a  certain  sum,  and  contained  the  follow- 
ing words:  "With  ten  per  cent,  interest  un- 
til paid;  if  not  paid  when  due,  and  suit  is 
brought  thereon,  I  hereby  agree  to  pay  col- 
lection and  attorneys'  fees  therefor;"  and  the 
court  held  them  to  be  negotiable,  saying  the 
attorneys'  fees  are  not  part  of  the  sums  due 
on  the  notes,  but  are  an  amount  for  which  the 
maker  may  become  liable  when  a  legal  reme- 
dy is  enforced  against  him.  Shugart  v.  Pat- 
tee,  37  Iowa,  422;  Bank  v.  Breese,  39  Iowa, 
640;  Howenstein  v.  Barnes,  5  Dill.  482,  Fed. 
Cas.  No.  G,7SG;  Schlesinger  v.  Arline,  31  Fed. 
648;  Sewing  Mach.  Co.  v.  Moreno,  6  Sawy. 
35,  7  Fed.  80G. 

Inasmuch  as  the  note  is  negotiable,  and 
passes  by  indorsement  to  the  assignee,  the 
agreement  as  to  the  attorney's  fee  also  passes 
to  such  assignee  as  a  part  of  the  note.  The 
stipulation  or  promise  to  pay  the  attorney's 
fee  is  not  made  with  the  payee  alone.  The 
note  is  payable  to  the  payee  or  order.  The 
promise  is  as  much  to  the  holder  as  to  the 
original  payee.  The  fee  is  to  be  paid  if  the 
note  is  not  paid  when  due,  whether  it  is  then 
owned  by  the  payee  or  by  any  other  holder. 
Moreover,  the  attorney's  fee  is  an  incident  to 
the  main  debt  and  passes  with  it.  Bank  v. 
Ellis.  2  Fed.  44;  2  Daniel,  Neg.  Inst.  §  C2a; 
Adams  v.  Addington,  10  Fed.  S9.  The  prom- 
ise to  pay  it,  thereby  lessening  the  cost  of 
collection  in  case  of  suit,  gives  the  note  cur- 
rency as  well  as  security,  and  is  regarded  as 
a  provision  for  the  indorsee  or  holder  as  well 
as  for  the  payee.  Bank  v.  Ellis,  0  Sawy.  9tj, 
2  Fed.  44.  Daniel,  in  his  work  on  Negotia- 
ble Instniraouts,  (volume  2,  §  G2a,)  says: 
"When  the  added  stipulation  is  deemed  valid, 
and  the  bill  or  note  negotiable,  such  stipula- 
tion becomes  a  part  of  the  acceptor's  or  in- 
dorser's  contract,  and  need  not  be  sued  for 
by  the  attorney,  but  it  is  recoverable  by  the 
holder  of  the  instrument"  See  cases  cited 
In  note  3. 


A  further  question  arises  as  to  the  mode  of 
enforcing  the  collection  of  the  fee.  It  is  said 
that  it  cannot  be  recovered  in  a  separate  suit 
if  it  is  not  embraced  in  the  recovery  on  the 
note.  Such  seems  to  be  the  doctrine  in  In- 
diana. Smiley  v.  Meir,  47  Ind.  559.  In  a 
case  in  Iowa,  also,  where  the  note  sued  on 
contained  a  stipidation  "to  pay.  in  addition 
to  the  amount  thereof,  fifteen  dollars  attor- 
neys' fees  if  the  note  is  collected  by  suit," 
it  was  held  not  to  be  the  intention  of  the  par- 
ties that  the  fee  should  become  due  only  after 
the  note  was  collected  by  suit,  but  to  be  their 
intention  that  the  fee  should  be  recoverable 
with  the  amoimt  of  the  note.  Shugart  v. 
Pat  tee,  37  Iowa,  422.  In  this  state  it  has 
been  held  that  the  fee  is  not  due  when  the 
suit  is  brought  on  the  note,  and  therefore 
cannot  be  included  in  the  assessment  of  dam- 
ages. Nickerson  v.  Babcock,  29  111.  497; 
Easter  v.  Boyd,  79  111.  325.  In  the  two  cases, 
however,  in  which  this  coui't  so  held,  there 
was  no  express  agreement  in  the  note  that 
the  fee  might  be  recovered  in  a  separate  suit. 
Nickerson  v.  Babcock.  supra;  Easter  v.  Boyd, 
supra.  In  the  case  at  bar,  the  promise  is 
"to  pay  ten  per  cent,  on  the  amount  due 
hereon  in  addition  as  an  attorney's  fee,  and 
to  be  recovered  as  a  part  of  this  note  or  by 
separate  suit."  Whether  or  not  a  stipulation 
to  pay  the  fee  to  be  recovered  as  a  part  of 
the  note,  in  case  suit  is  brought  on  it  for  its 
nonpayment  when  due,  is  so  far  a  mere  inci- 
dent to  the  main  debt  that  a  separate  suit 
cannot  be  brought  for  the  fee  after  the  ter- 
mination of  the  suit  on  the  note,  is  a  ques- 
tion which  is  not  presented  by  this  record. 
We  see  no  reason  why  the  maker  of  the  note 
giay  not  stipulate  that  a  separate  suit  may  be 
Vrought  for  the  fee,  and  why  such  stipulation 
cannot  be  enforced  by  the  payee  or  the  hold- 
er. If  the  written  promise  to  pay  the  fee 
passes  to  the  holder  by  the  indorsement,  the 
written  agreement  as  to  the  mode  of  recovery 
-also  passes.  The  fact  that  the  engagement 
to  pay  a  fee  is  incidental  and  ancillary  to 
the  main  engagement  to  pay  the  debt  does 
not  prevent  the  maker  of  the  note  from  agree- 
ing to  submit  to  a  separate  suit  for  the  recov- 
ery of  the  fee.  We  are  therefore  of  the  opin- 
ion that  the  present  suit  is  properly  brought. 

It  is  fnrFhel-  claimed  that  the  agreement  to 
pay  10  per  cent,  as  a  fee  is  usurious.  The 
authorities  above  referred  to  hold  to  the  con- 
trary. Stoneman  v.  Pyle,  supra;  Sewing 
Mach.  Co.  V.  Moreno,  supra.  See,  also,  2 
Pars.  Notes  &  B.  pp.  413,  414;  Clawson  v. 
Munson,  55  111.  394;  Barton  v.  Bank.  122  111. 
3.-)2,  13  N,  E.  503.  There  is  here  no  viola- 
tion of  the  usury  law,  because  the  agreement 
"provides  for  new  or  additional  compensa- 
tion or  interest  for  the  use  of  the  money 
because  of  the  failure  to  pay  at  maturi- 
ty. It  is  not  in  the  natm-e  of  a  contract 
for  additional  interest,  but  a  provision  mere- 
ly against  loss  or  damage  to"  the  payee 
(or  holder)  specifically  pointed  out."  Barton 
V.  Bank,  supra.     There  is  nothing  to  show 


NOTE— DEFINITION-ATTORNEY'S  FEES. 


23 


that  10  per  cent,  on  the  amount  due  is  an  un- 
reasonable fee.  The  defendant  stood  by  bis 
demurrer  to  the  declaration,  which  described 
the  notes,  and  the  provision  therein  for  a  fee 
of  10  per  cent.  The  declaration  must  there- 
fore be  regarded  as  alleging,  in  substance, 
that  a  reasonable  attorney's  fee  was  10  per 
cent,  on  the  amount  due  on  the  notes.  Smiley 
V.  Meir,  supra.  The  judgment  of  the  appel- 
late com-t  is  affirmed.     Judgment  affirmed. 

(38  111.  App.  305.) 

In  error  to  and  appeal  from  the  circuit 
court,  Macoupin  county;  J.  J.  Phillips, 
Judge, 

A.  N.  Yancey,  for  plaintiff  in  error  and  ap- 
pellant. Palmer  &  shutt,  for  defendant  in 
error  and  appellee. 

WALL,  J.  This  was  a  suit  by  appellant 
against  the  appellee  to  recover  the  sum  of 
$1,619.23  for  the  attorney's  fees  specified  in 
the  notes  sued  upon  in  the  preceding  case 
between  the  same  parties.  The  instruments 
so  sued  upon  were  in  the  following  form, 
the  only  difference  being  as  to  amount  and 
time  of  payment:  "$543.47.  Bunker  Hill, 
111.,  December  31,  1895.  On  or  before  eight- 
een months  after  date,  for  value  received, 
we,  or  either  of  us,  promise  to  pay  to  the  or- 
der of  George  W.  Belt  five  hundred  and  for- 
ty-three and  forty-seven  one-hundredths  dol- 
lars, payable  at  the  banking  house  of  Belt 
Bros.  &  Co.,  in  Bunker  Hill,  Illinois,  with 
eight  per  cent,  interest  per  annum  after  ma- 
turity; and  if  not  paid  when  due,  and  suit 
is  brought  thereon,  then  we  promise  to  pay 
ten  per  cent,  on  the  amount  due  hereon  in 
addition,  as  an  attorney's  fee,  and  to  be  re- 
covered as  a  part  of  this  note  or  by  separate 
suit.  The  makers  and  indorsers  of  this  note 
hereby  severally  waive  presentment  for  pay- 
ment, protest,  and  notice  of  protest  and  non- 
payment, and  no  extension  of  time  of  pay- 
ment, by  payment  of  interest  in  advance  or 
otherwise,  shall  release  either  of  us  from 
the  obligation  of  payment.  William  M. 
Dorsey."  The  declaration  in  the  present 
suit  averred  that  these  notes  were  not  paid 
at  maturity,  that  suit  was  brought  thereon, 
and  that  the  sum  therein  demanded  for  said 
fees  had  not  been  recovered  in  said  suit.  A 
demurrer  was  sustained  to  the  declaration, 
and  judgment  was  rendered  against  the 
plaintiff  for  costs.  The  plaiutift"  brings  the 
suit  here  by  appeal. 

It  is  urged  in  support  of  the  judgment  that 
the  stipulation  for  the  payment  of  attorney's 
fees  rendered  the  instrument  nonnegotiable; 
that  it  was  not  a  promissory  note,  because 
by  said  stipulation  it  was  deprived  of  the 
element  of  certainty  as  to  the  sum  to  be 
paid,  which,  it  is  conceded,  is  one  of  the  es- 
sential features  of  a  promissory  note.  What, 
then,  is  the  effect  in  this  respect  of  such  a 
provision  in  an  instrument  which  in  all  oth- 
er   particulars    is    a   promissory    note?      In 


Xickerson  v.  Sheldon,  33  111.  372,  the  instru- 
ment contained  the  following:  "And  we  fur- 
ther agree,  if  the  above  note  is  not  paid 
without  suit,  to  pay  ton  dollars  in  addition 
to  the  above  for  attorney's  fees,"— the  stip- 
ulation differing  from  this  only  in  not  pro- 
viding that  the  fee  might  be  "recovered  as 
a  part  of  this  note  or  by  separate  suit."  It 
was  objected  that  this  clause  rendered  the 
instrument  nonnegotiable,  but  the  court  held 
otherwi.se,  and  sustained  the  judgment  in 
favor  of  the  indorsee  for  the  amount  of  the 
principal  and  interest.  The  plaintiff  in  that 
case  did  not  declare  for  the  fee,  and  did  not 
seek  to  recover  it  in  the  suit  on  the  note, 
and,  as  it  was  not  provided  that  it  might 
be  recovered  as  a  part  of  the  note,  it  is  prob- 
able he  could  not  successfully  have  claimed 
it  in  said  proceeding.  In  Daniel,  Neg.  Inst. 
(2d  Ed.)  §  G2,  it  is  said  that  such  provisions 
do  not  imi)air  negotiability,  and  that  the  lia- 
bility so  imposed,  as  for  every  engagement 
imported  by  the  note  or  bill,  enters  into  the 
acceptor's  and  indorser's  contract.  The  au- 
thor admits,  however,  that  the  early  cases 
are  not  all  in  accord  with  this  view,  and 
many  of  them  hold  to  the  contrary.  The 
later  cases  are  quite  harmonious,  and  the 
trend  of  modern  decisions  is  to  the  effect 
that  where  the  condition  superadded  is  to 
waive  an  exemption  or  to  confer  a  remedy 
in  respect  to  collection,  thereby  rendering 
the  paper  more  valuable,  there  is  no  loss  of 
negotiability.  We  extmct  the  following 
from  the  opinion  in  Stoneman  v.  Pyle.  35 
Ind.  1(»3,  found  in  the  note  to  Dafiiel's  text 
commenting  upon  such  a  clause:  "It  may  be 
conceded  that  a  note,  in  order  to  be  placed 
upon  the  footing  of  bills  of  exchange,  must 
be  for  a  sum  certain;  for  in  no  other  way 
can  the  maker  know  precisely  what  he  is 
bound  to  pay,  or  the  holder  what  he  is  en- 
titled to  demand.  But  the  note  in  question, 
if  paid  at  maturity  or  after  maturity  before 
suit  brought  thereon.  Is  for  a  sum  certain. 
On  the  maturity  of  the  note,  the  maker  knew 
precisely  what  he  was  bound  to  pay,  and 
the  holder  knew  what  he  was  entitled  to  de- 
mand. In  the  commercial  world,  commer- 
cial paper  is  expected  to  be  paid  promptly 
at  maturity.  The  stipulation  for  attorney's 
fees  could  have  no  force,  excei)t  upon  a  vio- 
lation of  his  contract  by  the  defendant. 
Had  the  defendant  kept  his  contract  and 
paid  his  note  at  maturity  or  afterwards,  be- 
fore suit,  he  would  have  been  required  to 
pay  no  attorney's  fee,  nor  would  there  have 
been  any  difficulty  as  to  the  extent  of  his 
obligation.  We  see  no  reason,  on  prim.-iple 
or  authority,  or  on  grounds  of  public  pol- 
icy, for  holding  that  such  a  stipulation  de- 
stroys the  commercial  character  of  paper 
otherwise  having  such  character.  The  case 
is  quite  analogous  to  a  cla.ss  of  cases  on  the 
subject  of  usury.  Says  Mr.  Parsons:  'So  if 
the  borrower  agrees  to  pay  the  sum  bor- 
rowe^^at  ^a  tim£_  certain,  or  on  demand, 
with  lawful  interest,  and,  if  he  fails  to  do 


24 


NOTE— DEFINITION— ATTORNEY'S  FEES. 


so.  80  much  more  by  way  of  penalty,  even  if 
it  be  called  "extra  interest,"  this  is  noiTsuch 
usury  as  would  affect  the  contract,  because, 
the  borrower  has  the  rijrht  to  pay  the  prin- 
eipafand  avoid  the  penalty.'  '2  I'ars.  Notes 
&  B.  413-414.  So  here  the  defendant  had 
The  rijrht  to  pay  the  face  of  the  note  when 
due.  and  avoid  the  attorney's  fees.  As  long 
as  the  note  retained  the  peculiar  character- 
istics of  commercial  paper,  viz.  up  to  the 
time  of  maturity  and  dishonor,  the  amount 
to  be  paid  on  the  one  hand  and  to  be  re- 
ceived on  the  other  was  fixed  and  definite." 
To  the  same  effect  are  Sperry  v.  Horr,  32 
Iowa,  184;  Gaar  v.  Louisville  Banking  Co., 
11  Bush  (Ky.)  180;  Seaton  v.  Scovill,  18 
Kan.  433;  Adams  v.  Addington,  16  Fed.  89; 
Wilson  Sewing  Mach.  Co.  v.  Moreno,  G 
Sawy.  3o,  7  Fed.  SOti;  Bank  of  British  North 
America  v.  Ellis.  6  Sawy.  9G,  Fed.  Cas.  No. 
859;  Howenstein  v.  Barnes,  5  Dill.  482,  Fed. 
Cas.  No.  G,78G;  Dietrich  v.  Bayhi,  23  La. 
Ann.  7(;7;  1  Rand.  Com.  Paper,  §  20.j,  and 
notes. 

In  Seaton  v.  Scovill,  supra.  Brewer,  J., 
quotes  with  approval  from  the  Kentucky 
case  the  following,  viz.:  "The  rea.son  for 
the  rule  that  the  amount  to  be  paid  must  be 
fixed  and  certain  is  that  the  paper  is  to  be- 
come a  substitute  for  money,  and  this  it 
cannot  be  unless  it  can  be  ascertained  from 
it  exactly  how  much  money  it  represents. 
As  long,  therefore,  as  it  remains  a  substitute 
for  money,  the  amount  which  it  entitles  the 
holder  to  demand  must  be  fixed  and  cer- 
tain; but  when  it  is  past  due  it  ceases  to 
have  that  peculiar  quality  denominated  'ne- 
gotiability,' or  to  perform  the  office  of  mon- 
ey, and  hence  anything  which  renders  its 
amount  uncertain  only  after  it  has  ceased 
to  be  a  substitute  for  money,  but  which  in 
no  wise  affected  it  until  after  it  had  per- 
forme<l  its  office,  cannot  prevent  its  becom- 
ing negotiable  paper," 

The  conclusions  to  be  drawn  from  the 
foregoing  authorities  are  that  the  amount 
payable  by  a  negotiable  instrument  at  ma- 
turity must  be  certain.  If  this  amount  is 
made  uncertain,  by  requiring  the  payment 
at  maturity  of  an  indefinite  sum  for  collec- 
tion, expenses  as  attorney's  fees,  and  the 
like,  then  the  Instrument  is  rendered  not 
negotiable  on  account  of  the  uncertainty  in 
amount,  and,  being  not  negotiable,  indoi-sees 


cannot  sue  upon  the  instrument,  though  the 
payee  may  sue  the  maker.  But,  if  the 
amount  payable  at  maturity  is  certain,  it  is 
not  rendered  uncertain  by  a  stipulation  to 
pay  an  indefinite  sum  for  attorney's  fees  or 
other  expenses  to  be  incurred  and  paid  after 
maturity.  Such  provisions  tending  to  ren- 
der the  instrument  more  valuable,  by  insur- 
ing the  holder  against  loss  or  expense  in 
making  the  collection,  are  not  regarded  with 
disfavor  by  the  courts,  and  pass  with  the 
instrument  by  indorsement,  and  may  be  en- 
forced by  the  indorser  in  his  own  name. 
Tested  by  those  principles,  the  instruments 
in  question  must  be  regarded  as  promissory 
notes,  and  negotiable  as  such. 

It  is  argued  in  behalf  of  appellee  that  no 
consideration  is  averred  or  appears  from  the 
alleged  facts  to  support  the  promise  to  pay 
such  fees.  We  think  the  position  is  unten- 
able, for  the  reason  that  whatever  supports 
the  undertaking  in  one  particular  will  sup- 
port the  whole.  The  instnament  being  a 
promissory  note,  a  consideration  is  implied 
as  well  as  expressed.  That  consideration 
goes  to  the  undertaking  as  an  entirety,  sup- 
porting each  substantive  part  as  well  as  the 
whole.  It  applies  as  well  to  the  attorney's 
fee  as  to  the  waiver  of  protest,  interest  after 
maturity,  or  the  principal  itself.  It  is  all 
one,  and  supports  the  entire  contract,  all  of 
which,  having  passed  to  the  indorser,  maj^ 
be  enforced  by  him  according  to  its  terms. 
We  are  of  the  opinion  the  declaration  dis- 
closed a  cause  of  action  in  the  plaintiff,  and 
that  it  was  error  to  sustain  the  demurrer. 
The  judgment  will  be  reversed,  and  the 
cause  remanded.    Reversed   and  I'emanded. 

NOTE.  Bank  of  C«mmerce  v.  Fuqua,  11 
Mont  285,  28  Pac.201:  Montgompry  v.Crossth- 
wait.  90  Ala.  y">3.  8  South.  498:  Bowie  v.  Hall, 
G9  Md.  433,  16  Atl.  64:  Sperry  v. Horr.  32  Iowa, 
18-1.  Contra.  First  Nat.  Bank  v.  Babcock,  94 
Cal.  90.  29  Pac.  4\T^■,  Altman  v.  Rittershofer, 
68  Mich.  287,  36  N.  W.  74.  See.  for  further 
discussion  sustaining  this  rule,  Benn  v.  Kutz- 
scban,  24  Or.  28.  32  Pac.  70^3:  Farmers'  Nat. 
Bank  v.  Sttton  Manuf'g  Co..  3  C.  C.  A.  1,  52 
Fed.  191;  Wood's  Byles,  Bills  &  N.  167.  note 
(l)ottom  page).  See  Benn  v.  Kutzschan  and 
Farmers'  Nat.  Bank  v.  Sutton  Manuf'g  Go. 
for  a  collection  of  the  cases  pro  and  con.  Also 
Tied.  Com.  Paper,  §  28b,  note;  Stoneman  v. 
Pvle.  35  Ind.  103:  Sperry  v.  Horr.  32  Iowa, 
1.S4-  Iron  City  Nat.  Bank  t.  McCord,  1.39  Pa. 
St.  .")2.  21  Atl.  143:  Leggett  v.  Jones,  10  Wis. 
35:  Second  Nat.  Bank  v.  Wheeler,  75  Mich. 
54G,  42  N.  W.  9G3. 


NOTE-INDUKSEK— UUARAXTUlt— PKE!5UMPT10N  OF  LAW 


25 


MILLIGAN  V.  HOLBROOK. 

(48  N.  E.  157.  168  111.  343.) 

Supreme    Court    of    Illinois.      Nov.    1,    1897. 

Appeal  from  api)ellate  court,  First  district. 

Assumpsit  by  Charles  F.  Millijian  against 
Zephaniali  S.  Holbrook.  From  a  judgment  of 
the  appellate  court  (68  111.  App.  631)  affirming 
judgment  for  defendant,  complainant  appeals. 
Aftirnied. 

G.  W.  &  J.  T.  Kretzinger,  for  appellant. 
Ashcraf t,  Gordon  &  Cox,  for  appellee. 

BOGGS,  J.  Appellant  brought  asKiuupsit 
against  the  appellee  in  the  circuit  court  of 
Cook  county  to  enforce  an  alleged  liability  as 
guarantoi;  of  a  note  given  by  one  Day  to  the 
appellant,  the  payee,  and  indorsed  in  blank 
by  appellee.  The  defense  was  that,  by  virtue 
•of  a  special  agreement  entered  into  between 
appellant  and  appellee  at  the  time  the  note 
was  indorsed,  the  liability  of  the  appellee  was 
that  of  an  indorser.  The  cause  was  submitted 
in  the  circuit  court  to  the  court,  without  a 
jury.  The  judgment  was  adverse  to  the  appel- 
lant. He  brought  the  case  by  appeal  to  the 
appellate  court  of  the  First  district,  and,  the 
judgment  of  the  circuit  court  being  attirmed, 
he  has  prosecuted  a  further  appeal  to  this 
■court. 

*  The  only  question  arising  upon  the  record 
in  this  court  is  whether  the  circuit  court  errod 
in  holding  that  the  fourth  proposition  correctly 
stated  a  principle  of  law  applical)le  to  the  con- 
tention. The  proposition  is  as  follows:  "Held 
AS  law  in  this  case  that  if  the  coiu-t  should  be- 


lieve from  the  evidence  that  at  the  time  the 
name  of  Holbrook  was  placr-^  •;  ''-^  back  of 
the  note  in  evidence,  that  pi:  1  in  sub- 

stance to  Holbrook.  'Vmi  in  -  ■  se  notes, 
do  you  not?'  that  HoHm  i  k  i.pl  .1.  I  indorse 
fhese  notes  becau-se"!  coua;»l.  r  Mi.  Day  goo<l. 
gijd  you  have  got  to  exhau^^  him  before  you 
can  collect  of  me,  and  that  plaintiff  replied, 
'All  right,"  and  that  tiiereupon  Htilbrook  put 
his  name  on  the  bacIv^Sniie  note.s.  and  they 
were  delivered  to  the  plaintiff;  anJTTf  Tlie' 
court  should  believe  from  the  evidence  that 
no  other  or  different  arrangement  or  language 
was  used  than  aforesaid,  and  that  no  other 
agreement  or  understanding  was  had  than 
embraced  in  the  language  afonsaid, — that  then 
and  in  that  case  Holbrook,  as  matter  of  law. 
contracted  as  indorser,  and  not  as  a  guarantor, 
and  this  action  cannot  be  maintained."  The 
presumpti(.n  of  the  law  is, that  the  liability  of 
the  appellci'  is  that  of  a  giiariuitor,  but,  ag-th* 
note  is  still  in  the  hnndiT'of  the  payee,  that 
presumption  niaj-  be  rebutted,  and  is  rebutted 
if  it  appears  that  the  real  contract  between  the 
arpcllee  and  the  payee  was  that  the  liability 
of  the  appellee  is  that  of  an  indorser.  Bank  v. 
Ni.xon,  12.")  111.  61.5.  18  N.  E.  2it3.  So  far  as 
the  fourth  proposition  purports  to  state  a  prin- 
ciple of  law,  the  rule  announced  is  correct. 
Tlie  matters  of  fact  referred  to  in  the  proposi- 
tion tended  to  eslal>lish  an  agreement  limit- 
ing  the  liability  of  the  appellee  to  that  of  in;: 
dorser,  and  that  the  preponderance  oTTTie^  evi- 
dence supported  the  judgment  is  conclusi>e)y 
settled  by  the  decision  of  the  appellate  court. 
The  judgment  of  the  appellate  court  is  allirni- 
ed.    Atlirnu'd. 


.f-HrL 


26 


NOTE— DONOll  TO  DONEfcl— DELIVEUY. 


SCHOOL  DIST.  OF  CITY  OF  KANSAS 
CITY  v.  STOCKESG  et  al. 

(40  S.  W.  656.) 

Sapreme  Court  of  Missouri.     May  4,  1S97. 

In  h.nnc.  Appeal  from  circuit  court,  Jackson 
county. 

Action  by  the  school  di5>trict  of  the  city  of 
Kansas  City  against  William  L.  Stocking  and 
another,  executors  of  George  Sheidley,  deceas- 
ed, on  three  notes.  Judgment  for  plaintiff, 
and  defendants  appeal.    Affirmed. 

W.  L.  Stocking  and  C.  O.  Tichenor,  for  ap- 
pellants. Gage,  Ladd  &  Small,  for  respond- 
tixxi. 

MACFARLANE,  J.  Plaintiff,  a  public- 
school  cori)oration.  sues  the  defendant.'*,  as 
executors  of  George  Sheidley.  deceased,  upon 
three  promissory  notes,  dated  March  9,  1S'.>4, 
each  for  $5,000,  payable,  respectively,  6,  12, 
and  IS  months  after  date,  one  of  which  is  as 
follows:  "S5.000.00.  Kansas  City.  Mo..  March 
9,  1894.  Six  months  after  date.  I  promise  to 
pay  school  district  of  Kan.sas  City.  Missouri, 
or  order,  at  the  Union  National  Bnnk.  Kansas 
City,  five  thousand  dollars,  for  value  received, 

with  interest at  the  rate  of  no  per  cent. 

per  annum.  George  Sheidley."  By  answer,  de- 
fendants admit  the  execution  of  the  notes,  but 
set  up  as  defen.ses— First,  that  at  the  time  of 
their  execution  the  testator  was  of  unsound 
(uind.  and  incapable  of  making  them;  second, 
that  they  were  wholly  without  consideration; 
and,  third,  that  they  were  never  delivered. 
The  case  was  tried  to  a  jury,  and  a  verdict 
was  found  for  the  plaintiff  on  all  three  counts. 
Judgment  was  rendered  in  accordance  there- 
with, and  defendants  appeal. 

On  the  question  of  want  of  capacity  of  de- 
ceased to  make  the  notes,  defendants  assign 
no  error,  but  agree  that  that  issue  was  fairly 
tried.  Tlie  evidence  shows  that  the  building 
occupied  bj'  the  Siihool  district  for  a  library 
was  regarded  as  wholly  insufficient,  ?nd  for 
several  years  prior  to  the  execution  of  these 
notes  the  erection  of  a  new  building  had  been 
under  consideration  by  the  board  of  educa- 
tion. For  the  pun)ose  of  purchasing  a  site 
and  erecting  the  building,  an  issue  and  sale 
of  bonds  of  the  district  had  been  contempl.-i'ted. 
Previous  to  this  tran.«action,  George  Sheidley 
had  expressed  an  intention  of  making  a  do- 
nation of  .*25,000  to  the  district,  to  be  used  in 
the  purciiase  of  books.  About  this  time  ttie 
board  came  to  the  conclusion  that  the  i)roceeds 
of  "bonds  could  not  be  lawfully  applied  to  the 
purchase  of  a  site  for  the  building,  and.  tiiere 
being  no  other  funds  with  which  to  m'ak'e  such 
purchase,  it  concluded  that  the  enterprise  would 
have  to  be  abandoned.  Sheidley,  being  inform- 
ed of  the  difficulty,  and  probable  failure  of  the 
enterjirise  for  want  of  means  to  purchase  a  site. 
advisi-d  the  board  of  lus  willingness  tojilLoslJt 
to  use  the  intended  donation  in  any  manner  it 
saw  fit.  A  meeting  between  him  and  a  com- 
mittee of  the  board  was  held,  and  his  propos- 


ed donation  for  that  purpose  was  accepted, 
giieidley  at  the  time  did  not  have  the  ready 
nutuey.'but  proposed  giving  his  notes  to  the 
district,  payable  in  the  future,  but  promising 
that  they  would  Ije  paid  whenever  the  money 
was  needed.  It  was  thereupon  agreed  that  he 
should  make  five  notes,  of  $5.500  each,  pay- 
able to  the  district;  and,  as  he  was  expecting^ 
to  leave  Kansas  City  the  next  morning,  he 
agreed  to  place  them  in  the  hands  of  Thomas 
B.  Tomb,  for  the  board,  to  be  handed  to  it 
when  called  for.  The  next  morning,  JLarch 
9.  1S94,  lie  executed  the  notes  and  delivered 
them  to  Tomb,  as  agreed,  and  informed  the 
president  of  the  board  that  he  had  done  so.  A 
nl'eeting  of  the  board  was  immediately  called, 
and  the  president  made  the  following  report 
of  what  had  been  done:  "Since  recess  was 
taken  last  Thur-^day  evening,  we  had,  in  com- 
pany with  J.  C.  James  and  J.  V.  C.  Karnes, 
called  on  Mr.  George  Sheidley.  who  had  here- 
tofore offered  to  give  ?25.<X)0  towards  buying 
books  for  use  in  the  library  building  to  be 
erected,  and,  owing  to  the  embarrassment  of 
the  board  about  securing  a  site  for  said  build- 
ing, Mr.  Sheidley  agreed  to  change  the  form 
of  his  donation,  and  was  willing  to  allow  this 
sum  to  be  used  in  such  way  as  the  board 
might  deem  best  to  secure  the  erection  of  said 
building;  and.  to  make  sure  of  such  offer,  he 
has  placed  said  .sum  in  the  hands  of  Thomas 
B.  Tomb,  to  be  held  for  this  board,  and  to  be 
turned  over  whenever  the  board  may  call  for 
the  same  to  be  used  in  securing  said  building." 
A  vote  of  thanks  was  thereupon  Rendered  to 
Mr.  Sheidley  for  his  liberal  donation,  and  the 
following  resolution  was  adopted:  "Whereas, 
in  the  judgment  of  this  board  it  is  expedient 
that  the  school  district  borrow  $200,000  for 
the  purpose  of  erecting  a  public  library  buitd- 
ing.  containing  the  offices  of  the  board  of  di- 
rectors of  the  school  district,  and  to  issue 
therefor  the  bonds  of  the  district:  Therefore, 
resolved,  that  there  be  .submitted  to  the  qual- 
ified voters  of  the  school  district  of  Kansas 
City,  in  the  county  of  Jack.son  and  state  of 
Missouri,  at  the  biennial  election  for  school 
directors  to  be  held  on  the  3rd  day  of  April. 
1894.  a  proposition  authorizing  the  board  of 
directors  of  said  school  district  to  borrow  on 
behalf  of  the  school  district  the  sum  of  .$200.- 
(MM)  for  the  purpose  of  erecting  a  public  li- 
brary building,  containing  the  offices  of  the 
board  of  directors  of  the  school  district,  and 
for  the  payment  thereof  to  issue  the  bonds  of 
the  school  district.  Such  bonds  to  be  of  the 
denomination  of  $1,000  each,  dated  July  2, 
1S!>4,  payable  twenty  years  from  their  date, 
with  interest  at  the  rate  of  four  per  cent,  per 
annum,  payable  semiannually  on  the  second 
days  of  July  and  January  in  each  year;  both 
principal  and  interest  payable,  in  gold  coin  of 
the  United  States  of  America,  in  the  city  and 
state  of  New  York.  Resolved,  that  the  presi- 
dent and  secretary  of  the  board  be,  and  they 
are  hereby,  authorized  and  directed  to  sign 
and  publish,  according  to  law,  notice  of  the 
submi.s.sion  of  such  jiroposition,  and  to  take  all 


NOTE— DONOR  TO  DONEE— DELIVERY. 


27 


other  necessary  steps  for  the  proper  submis- 
sion thereof,  in  accordance  with  the  terms  of 
this  resolution."  In  pursuance  of  this  resolu- 
tion an  election  was  held  which  resulted  in  an 
almost  unanimous  vote  in  favor  of  borrowin.;? 
$200,000  for  the  purpose  of  erecting  a  public 
hbrary  building.  Bonds  were  thereafter  is- 
sued and  sold,  and  the  proceeds  were  placed  in 
the  hands  of  the  treasurer.  This  was  all  con- 
cluded July  14,  18W.  Mr.  Sheidley  was  taken 
§.ick  about  the  1st  of  July,  IS'.W,  and  was  there- 
after, until  his  death,  incapa])le  of  attending 
to  business.  On  the  14th  of  July,  ISIM,  the 
president  of  the  board  demanded  the  notes  of 
Tomb,  who  declined  to  deliver  them,  on  ac- 
count of  objections  by  members  of  Sheidley's 
family.  The  board  afterwards,  in  February, 
1895,  purchased  a  site  for  $30,000,  $5,000  of 
which  was  paid  in  cash,  out  of  tlie  general  rev- 
enues of  the  district,  and  assumed  mortgages 
on  the  land,  extending  over  a  number  of  years, 
for  the  balance  of  the  purchase  price.  The 
board  thereupon  proceeded  In  the  erection  of 
the  building. 

At  the  request  of  the  plaintiff  the  coiu-t  gave 
the  jury  the  following  instructions:  "(1)  You 
are  instructed  that,  in  order  to  constitute  a 
consideration  for  the  notes  in  suit,  it  is  not 
necessary  that  George  Sheidley  should  have 
himself  received,  or  have  expected  to  receive, 
any  benefit  on  account  thereof.  But,  if  you 
believe  from  the  evidence  that  the  plaintiff, 
through  its  board  of  education,  relying  upon 
the  fact  that  the  five  notes  had  been  executed 
and  left  with  Mr.  Tomb,  incurred  and  paid 
expense  in  connection  with  the  submission  to  a 
vote  of  the  people  of  the  question  as  to  the 
issue  of  the  bonds  of  the  district,  and  other 
expenses  in  connection  with  the  issue  of  the 
bonds,  and  did  incur  a  liability  of  $200,000  by 
the  issue  and  sale  of  tlie  bonds,  and  that  said 
action  of  the  plaintiff,  througli  its  board  of  ed- 
ucation, was  induced  by  the  promise  of  the 
defendant  to  execute  said  notes,  and  by  his 
subsequent  execution  thereof,  and  that  the  pur- 
pose of  defendant  in  making  said  promise  and 
executing  said  notes  was  to  enable  and  induce 
the  plaintiff  to  take  such  action,  this  consti- 
tutes a  good  consideration  for  tlie  notes.  (2) 
The  jury  are  instructed  that,  to  constitute  a 
delivery  of  the  notes  in  suit,  it  was  not  nec- 
essary that  tlioy  should  be  placed  by  the  de- 
fendant himself  in  the  liands  of  any  member 
of  the  board  of  education.  But  if  you  believe 
from  the  evidence  that  in  pursuance  of  an  ar- 
rangement and  a  promise  to  that  effect  made 
by  George  Sheidley  to  Messrs.  Yeager,  Karnes, 
and  James  on  the  evening  of  March  8,  ISIH, 
he  did  on  the  next  day  execute  the  notes,  and 
leave  them  with  Mr.  Tomb,  for  the  board  of 
education,  with  instructions  to  him  to  hand 
them  to  the  board  when  any  of  its  members 
should  call  for  them,  intindinj:  there'  y  1o  p'ace 
them  at  the  disposal  of  tlie  board  of  education, 
this  constitutes,  m  law,  a  complete  delivery  of 
the  notes  to  the  plaintiff."  Defendants  re- 
quested, and  the  court  refused  to  give,  the  fol- 
lowing instructions:  "(1)  The  jury  are  instruct- 


ed that  a  promissory  note  Is  but  the  promise 
to  pay  money  In  the  future,  and,  if  made  and  " 
delivered  purely  as  a  £ift,  is  without  consid- 
eration, anTPcarmot  be  enforced  against  the 
maker.  Such  a  note  is  but  a  promise  to  make 
a  gift  in  the  future.  (2)  The  only  act  claimed 
to  have  been  done  by  plaint iit  upon  the 
strength  of  tlie  verbal  promise  of  George  Sheid- 
ley to  give  $2."»,0<i0  is  the  submission  X2L  ^lie 
voting  (  f  certain  of  its  bonds, for  whi -h  plilntiCP 
received  full  value.  (?>)  The  jurj-are  instructed 
that  although  It  may  be  the  fact  that  plaintilj 
would  not  have  submitted  the  proposition  to 
vote  for  bonds  to  build  a  librarj-  building,  ex- 
cept for  a  promise  tn  the  lart  of  George  Sheid- 
ley to  give  ."<2r>.(KH),  jM?t  ydu  are  instnu-ted  that 
such  submission  constitutes  no  consi  leratiojj 
Ijir  tlie  notes  referred  to  in  the  petition.  (4; 
The  jury  are  iustructi-d  that,  at  the  time 
(Teorge  Sheidley  signeil  the  notes  sued  on, 
tluTe  was  no  subsist.ug  liab.lity  on  the  part  of 
said  Sheidley  to  the  plaintiff,  and  hence  there 
was  no  consideration  for  said  notes,  and  your 
verdict  must  be  for  defendant.  (5)  The  jury 
are  instructed  that  the  notes  sued  on  are  in 
the  possession  of  one  Toinb,  and  always  have 
been,  and  that,  therefore,  i^laiutiff  is  n  tthe 
holder'thereof,  and  lience  your  verdict  must  !>■ 
for  defendant.  (6)  Under  the  pleadings  ami 
the  evidence,  your  verdict  must  be  for  the  de- 
fendant." 

1.  Tlie  substantial  and  most  important  con 
troversy  in  this   case  is  wlicther,   under  the 
evidence,  any  consideration  for  the  notes  sueil 
upon  was  shown.      It  is  conceded^  by  plain- 
tiff's counsel  that  Sheidley  received'no  benefit 
for  his  promises  which  can  be  regarded  as  a 
sufficient  consideration  to  support  them.    That 
tlie  notes  were  intended  by  the  maker,  and 
accepted  by  the  payee,  as  voluntaiy  donations, 
is  uiKiuestioned.    "It  is  essential  to  a  gift  that 
it  go  into  effect  at  once,  and  completely.     If 
It  regards  the  future,  it  is  but  a  promi.se.  and. 
being  a  promise  without  consideration,  it  can 
not  be  enforced,  and  has  no  legal  validity." 
Spencer  v.  Vance,  57  Mo.  429;    Tomlinson  v. 
Ellison.  104  Mo.  lO.l,  IG  S.  W.  201.     That  the 
note  of  a  donor  to  a  donee  is  not  the  subject 
of  a  gift  is  well-settled  law.     Such  a  note  is 
but  the  promise  of  the  donor  to  pay  money  in 
the  future.      The  gift  is  not  completed  until 
the  money  is  paid.     There  is  no  dehvery  of  the 
gift,  but  a  mere  promise  to  deliver  in  the  fu- 
ture.   Such  a  note,  treated  purely  as  a  gratui- 
tous promise,  cannot  be  enforced  eitlier  in  law 
or  equity.      The  question,  then,  is,  can  these 
notes   be   enforced,    as   valid   contracts,   not 
withstanding    Sheidley    received    no    benertl 
therefrom,  and  intended  them  as  purely  grat 
uitous  donations?     If  so,  there  must  liave  been 
a  legal  consideration  moving  from  the  district 
to  him.      To  constitute  such  consideration,  U 
is_not^^e^ti£^_,tllatS.lieiaUaLsiio»^^^l  l"i^e  I'e 
rived   some  bene|JLIrQUi_tJie_jir'Jii)ise.     The 
cohsMeration  will  be  sufficient_to  support  the 
promTse  [f  the  district  expt>ndod  money  OfliUa:. 
curred  eiiforceable  Uabilities_  in  reliance  there- 
on.    If  the  expense  was  incurred  and  the  lia- 


26 


NOTE-DONOU  TO  DONKK    PELIVEUY. 


bility  created  in  furtherance  of  the  enterprise 
the  donor  iutemled  to  promote,  and  in  reliance 
upon  tlie  promises,  they  will  be  taken  to  have 
been  incurred  and  created  at  his  instance  and 
request,  and  his  executors  will  be  estopped  to 
plead  want  of  consideration.     The  gratuitous 
promises  will  thus  be  converted  into  valid  and 
enforceable  contracts.      Brooks  v.  Owen,  llli 
Mo.  251.  r.>  S.  W.  723.  and  20  S.  W.  41)2;  Kocli 
V.  I-iy.  38  Mo.  147;    Steele  v.  Steele.  75  Md. 
477,  23  Atl.  JC>9;    University  of  Des  Moines  v. 
Livingston.  57  Iowa.  307,  10  N.  W.  7."\S;   Simp- 
son College  V.  Tuttle.  71  Iowa.  50G.  33  N.  W. 
74;    Trustees  v.  Garvey.  53  111.  401;    Amherst 
Academy  v.  Cowls,  d  Pick.  427;  Pitt  v.  Gentle. 
49  Mo.  74;   Kichelieu  Hotel  Co.  v.  International 
Military  Encampment  Co.,  140  111,  248,  29  N. 
K.   1044.      Mr.   Parsons   says;      "On  the   im- 
portant question,  how  far  voluntary  subscrip- 
tions,  for   cliari table  purjioses.   as   for  alms, 
education,   religion,  or  otlier   public   uses,  are 
binding,  the  law  has,  in  this  country,  passed 
through  some  fluctuation,  and  cannot  now  be 
regarded  as,  on  all  points,  settled.    Where  ad- 
vances have  ])een  made  or  expenses  or  liabili- 
ties incurred  by  others,  in  consequence  of  such 
subscriptions,  before  any  notice  of  withdrawal, 
this  should,  on  general  principles,  be  deemed 
sufficient  to  make  themobhgatoiT.  provided  the 
advances  were  authorized  by  a  fair  and  rea- 
sonable dependence  on  the  subscriptions;  and 
tliis  rule  seems  to  be  well  established.     And 
the  expenses  or  lial)ilities  need  not  have  been 
incurred  by  the  plaintiff,  if  othei-s  of  the  sub- 
scribers incurreil  them  on  the  faith  of  the  de- 
fendant's subscription."     1   Pars.   Cont.    (8th 
Kd.)  side  page  4.'>3.      In  Koch  v.  Lay.  supra, 
Wagner,  J.,  says:    "Where  notes  are  given  by 
one  or  more  persons  to  any   coiiioration  or 
other  legal  person,  or  any  trustees,  by  way  oi 
A  oluntary  subscription  to  raise  a  fund  to  pro- 
mote an  object,  these  notes  are  open  to  the 
defense  of  want  of  consideration  unless  the 
payee  has  expended  money  or  enteretl  into  en- 
gagements   which    by    legal    necessity    must 
cause  loss  or  injury  to  the  payee  if  the  notes 
are  not  paid.      There  ai*e  many  cases  which 
hold    that    gratuitous    promises    may   be    en- 
forced where  tliey  liave  operated  to  induce  en- 
gagements and   liabilities   witliin  the   knowi- 
<.'dge  of  the  promisor.     Incurring  expense  and 
assuming    liabilities    in    consequence    of    the 
l)romise  is  regardetl  as  sufficient  consideration 
for  the  promise."     It  appears  from  the  evi- 
4lence,  beyond  any  reasonable  controversy,  we 
think,   that  while  ^he  board  of  directors  re- 
garded the  erection  of  a  building  for  a  public 
library,  in  connection  with  the  schools  of  the 
district,  to  be  of  great  public  need,  yet  it  had 
wholly  abandoned  the  enterprise,  for  the  rea- 
son alone  tliat  it  had  not  on  hand,  and  could 
not   procure,    the    means   necessary   for   pur- 
chasing the  land  on  which  to  build  it      At 
this  juncture  Mr.  Slieidley  made  his  offer  to 
donate  ?25.0(M)  to  the  district,  to  be  used  by 
the  board  of  directors  in  such  way  as  it  might 
deem  best  to  secure  the  erection  of  said  build- 
ing.    This  offer  was  accepted,  and  tlie  notes 


in  suit  were  executed,  and  placed  in  the  hands 
of  Tomb,  as  hereinbefore  stated.  Sheidley 
knew  perfectly  well  the  difficulty  under  which 
the  l)oard  was  placed,  and  his  intention  un- 
questionably was  that  the  money,  when  paid, 
should  be  applied  to  the  purchase  of  a  site  for 
the  building,  and  tliat  the  enterprise  should 
go  on  at  once.  The  board  of  directors,  rely- 
ing upon  these  promises,  immediately  submit- 
ted to  a  vote  of  the  district  a  proposition  to 
borrow  $200,000  and  issue  the  obligations  of 
the  district  for  its  payment.  The  election  was 
held  at  an  expen.se  to  the  district  of  about 
$550.  The  bonds  were  thereafter  issued  and 
sold,  and  valid  obligations  of  the  district  were 
thereby  created  for  $200,000.  Under  the  well- 
settled  principles  of  law  above  stated,  the 
notes  are  supported  by  a  sufficient  considera- 
tion. In  reliance  on  tlie  promises,  and  in 
furtlinrance  of  tlie  public  enterprise  they  were 
intended  to  promote,  the  district,  in  good  faith, 
expended  a  considerable  sum  in  holding  an 
election,  and  incurred,  presumably,  a  valid  in- 
debtedness for  a  large  amount.  The  expendi- 
ture incurred  and  the  indebtedness  created 
were  necessary  in  order  to  secure  money  for 
the  erection  of  the  building.  This  necessity 
was  well  known  to  Sheidley  when  he  execut- 
ed the  notes. 

2.  It  appears  from  the  evidence  that  Sheid- 
ley was  adjudged  insane  in  October,  1894, 
and  that  the  site  for  the  building  was  not 
bought  until  February,  1895.  From  these 
facts  it  is  argued  that  the  promises  were  re- 
voked before  the  site  was  purchased,  and 
there  was  therefore  no  consideration  for  the 
Rotes.  It  cannot  be  said  that  the  purchase  of 
a  site  and  the  erection  of  the  building  were  in- 
dependent enterprises.  They  constituted  but 
one  undertaking,  namely,  that  of  securing  a 
library  building.  The  notes  became  valid  and 
irrevocable  contracts  as  soon  as  the  district, 
relying  upon  their  payment,  expended  money 
or  incurred  liability  in  promoting  the  general 
enterprise.  This  occurred  before  Sheidley  was 
adjudged  insane,  and  his  insanity  or  death 
thereafter  could  not  revoke  them. 

3.  The  purchase  of  the  site  before  the  notes 
were  collected  could  not  effect  a  revocation  of 
agreements  which  had  become  vaUd  and  bind- 
ing obligations  before  that  time,  though  the 
application  of  the  proceeds  had  been  express- 
ly limited  to  the  purclif.se  of  the  site,  for  the 
reason  tliat  the  purchase  price  has  nat  yet 
been  paid.  The  proceeds  are  still  to  be  ap- 
plied to  such  purchase.  But  it  does  not  appear 
that  any  such  condition  was  imposed.  The 
board  of  directors  were  given  the  discrefion 
to  use  the  proceeds  in  such  way  as  it  might 
deem  best  in  order  to  secure  the  erection  of 
the  building.  There  would  be  no  misapplica- 
tion of  the  funds,  under  the  conditions  of  the 
gift,  though  applied  to  the  construction  of  the 
building. 

4.  It  is  also  insisted  that  there  was  no  con- 
sideration for  the  promises,  for  the  reason  that 
the  erection  of  the  building  was  legally  in- 
cumbent on  the  board,  and  the  voluntary  per- 


NOTE-DONOR  TO  DONEE-  I>KL1\  EUY. 


21> 


formance  of  an  act  which  was  legally  incum- 
bent on  the  party  to  perform  is  not,  in  law,  a 
sufficient  consideration.  This  contention  has 
a  sufficient  answer  in  the  fact  that  no  imjiera- 
tive  iPiral  duty  rested  upon  tlio  bDard  to  pro- 
vide a  library  IniildinR.  Tlie  board  of  direct- 
ors is  given  the  power  to  establish  and  main- 
tain libraries,  but  it  is  not  made 'Tfs"duty  to 
(io  so.  The  discretion  is  to  be  exercised  by 
tiie  board  in  view  of  all  the  circumstances  and 
conditions.  Rev.  St.  188!),  §§  SlfiO.  8112.  But 
Jjoards  of  education  are  given  express  jimwim- 
tji^accept  gifts  for^Uie  erection  of  library  Imill 
ings.  Acts  1801,  p.  205.  Th  ugh  they  may 
determine  to  provide  a  library,  tlie  character 
and  cost  may  be  determined  by  tlie  voluntai-y 
aid  they  may  receive  or  be  promisod.  Woik 
done  or  expenses  incurred  in  reliance  upon 
promises  to  give  in  the  future  would  as  well 
furnish  a  consideration  for  such  promises  as  it 
would  if  the  entire  enterprise  depended  upon 
the  promises.  We  think  the  consideration  for 
the  notes  sufficient,  and  find  no  error  in  giv- 
ing and  refusing  instructions  on  this  branch  of 
the  case. 

5.  We  think  there  was  a  sufficient  delivery 
of  the  notes.  II  was  not  essential  that  the 
actual  manual  possession  should  have  i)asse,l 
fo"some  member  of  the  board  in  order  to  ef- 
fect a  delivery.  A  constructive  delivery  was 
sufficient  AH  that  was  necessary  was  tliat 
tjbe  control  of  the  notes  should  have  passed 
from  Sheidley  with  his  consent,  and  tluit  tliey 
should  have  been  placed  by  his  direction  under 
tBe  power  and  control  of  the  board  of  educa- 
tion. Daniel,  Neg.  Inst.  §  G3a;  Ricliardson  v, 
Lincoln,  5  Mete.  (Mass.)  201;  Welch  v.  Dam- 
eron,  47  Mo.  App.  227.  The  evidence  shows 
that  the  notes  were  placed  by  Sheidley  in  the 
hands  of  Tomb,  with  directions  to  hand  them 
to  the  board  when  called  for.  This  was  done 
pursuant  to  a  previous  agreement  had  with 
the  board.  Tomb  testified  that,  when  the 
notes  were  handed  to  him,  Mr.  Sheidley  said 
that  "whenever  the  board  of  education  called 
for  them  I  should  give  tliem  to  them."  The 
Insti-uction  on  the  <iuestion  of  delivery  prop- 
erly declared  tlie  law. 

6.  Defendants  insist  that  if  the  board  of 
education  was  induced  to  order  and  hold  an 
election,  and  to  issue  the  bonds  of  the  district, 
by  the  promise  of  Sheidley  to  give  ^2.">,(XX)  in 
furtherance  of  the  enterprise,  then  such  prom- 
ise is  void,  as  being  contrary  to  public  policy. 
It  is  undoubtedly  the  policy  of  the  law  that  all 
public  officers  should  be  uninfluenced  and  un- 
biased in  the  discharge  of  their  official  duties, 
and,  as  said  by  Mr.  Bishop:  "Any  contract  be- 
tween an  officer  and  a  private  person  by  which 
the  former  undertakes  to  do  anything  of  offi- 
cial duty,  right  or  wrong,  in  accord  with  such 
duty  or  contrary  to  it,  is,  in  a  greater  or  less 
degree,  an  obsti-uction  to  the  unbiased  exer- 
cise of  his  office,  eveii  where  it  does  not  in- 
fluence him  corruptly,  and  is  therefore  void." 
Bish.  Cont.  §  500.  But  we  are  unable  to  see 
that  the  sound  policy  of  the  state  was  violated 
in  this  action   of  the  board,  all   the  circum- 


stances being  considered.  The  action  of  the 
board  was  not  Induced  by  the  i)r(>iiiises  of 
Slieidley,  in  the  sense  that  its  judguifut  and 
discretion  were  influenced  thereby.  IToe  ifaid 
had  before  that  exercised  its  judgment,  and  de- 
tennTnea~lhe  desirability _o_f_ft  new  public  ii- 
\jifary  Uuildlng.  The  obstacle  in  the  way  of 
voluntary  action  waSfTTie  need  of  money  to 
purcliase  a  site.  Its  conclusinn,  and  the  only 
obstacle  in  the  way  >  Hr  it  out,  were 

well  known.     Tlie  in  :    Sheidley  iOily 

empowered  the  board  to  ai  t  ujmn  its  judgment 
already  formed  and  pulilicl}-  declare<1.  It 
guide  the  wai'  clear  for  the  Uoaxtl  to  perform 
what  it  considered  a  public  duty.  We  can  see 
nothing  in  tlie  action  of  the  board  of  educa- 
tion calculated  to  control  or  influence  its  duty 
to  the  public,  or  which  is  the  least  immoral  in 
its  tendency.  The  jKilicy  of  the  state,  by  ex- 
press law,  favors  and  t-ncourages  donations  for 
the  erection  of  public  library  buildings,  and 
we  can  see  nothing  inconsistent  with  the  free, 
honest,  and  impartial  exercise  of  official  dis- 
cretion for  a  board  of  education  to  regulate  its^ 
action,  to  some  extent,  with  reference  to  the 
amount,  value,  and  character  of  volmitary  con- 
tributions, wliether  made  or  promised.  The 
fact  tliat  the  statute  gives  power  to  boards  of 
education  to  establish  and  maintain  libraries 
for  the  use  of  the  public  school  districts  there- 
of is  a  recognition  by  the  state  of  their  utility 
and  desirability,  and  the  only  question  boards 
really  have  to  deal  with  is  the  ability  of  the 
district  to  establish  and  maintain  them. 
Boards  must  necessarily  be  influenced  more  or 
less  in  their  actions  by  the  private  contribu- 
tions that  may  be  secured  or  promised.  Such 
^ctkm,  wlien  not  otlierwise  influcncwl,  cannot 
be  regarded  as  contrary  to  public  policy? 

7.  It  is  insisted  by  plaintifif  tliat.  the  ille- 
gality of  the  contract  not  having  been  jileaded 
as  a  defense,  the  question  should  not  be  con- 
sidered on  this  aiipeal.  'Hie  rule  is  that  if  a 
plaintiff,  in  order  to  make  out  his  cause  of 
action,  is  required  to  show  that  the  contract 
sued  upon  is,  for  any  reason,  illegal^  the  court 
should  not  enforce  it,  wliether  pleaded  "as  a 
de^^nse~6^  not.  But  when._yje  illegality  does 
not  appear  from  the  contract  itself,  or  from  the 
evidence  necessary  to  prove  it.  but  depends 
upon  extraneous  facts,  the  defeu:j£  is  new  mat- 
ter, and  must  have  been  pleaded  in  order  to 
be  available.  Musser  v.  Adler,  8G  Mo.  440; 
A-ssoclafion"  v.  Delano,  108  Mo.  217,  18  S.  W. 
1101.  In  this  case,  defendants  pleaded  want 
of  consideration,  and  the  notes  are  concedwlly 
mere  gratuitous  promises  to  pay  in  the  futun-. 
The  notes  were  tlierefore  void  as  gifts.  In  or- 
der to  prove  that  they  were  valid  contracts, 
supported  by  a  suflicient  consideration,  it  be- 
came necessary  for  plaintiff  to  prove  the  en- 
tire transaction  between  Sheidley  and  tlie 
board  of  education,  and  the  subsiniuent  action 
of  the  board  taken  in  reliance  on  the  jirom- 
ises.  If  the  notes  had  been  illegal,  as  against 
public  policy,  the  fact  was  necessarily  dis- 
closeil  by  plaintiff  in  making  out  its  case,  and 
it  would  have  been  the  duly  of  the  court  to 


30 


NOTE -DONOR  TO  DONEE-DELIVERY. 


deny  its  assistance,  whatever  the  condition  of 
the  pleading.  The  question  was  therefi  re  suf- 
ficiently raised  by  the  instruction  in  the  nature 
of  a  demurrer  to  the  evidence  to  requu-e  its 
consideration  on  appeal. 

8.  Evidence  was  admitted  on  the  trial,  over 
the  objection  of  defendants,  that  Mr.  Sheidley 
was  a  man  of  large  means.  This  evidence  vas 
clearly  inadmissible  on  the  issue  raised  upon 
the  defense,  that  the  notes  were  without  con- 
sideration. But  the  defense  was  also  made 
tiiat,  at  the  time  the  notes  were  executed,  de- 
fendants' testator  was  of  unsound  mind,  and 
Incapable  of  transacting  business.  The  notes 
amounted  to  $25,000,— a  very  large  stun  to  give 


away,— and,  for  a  man  of  moderate  circum- 
sTauoes,  would  have  furnished  a  circumstance 
tending  to  prove  want  of  capacity.  To  rebut 
that  tendency,  evidence  that  he  was  a  man  of 
wealth  was  admissible.  K  defendants  wished 
to  limit  the  effect  of  the  evidence,  they  should 
i&ave  asked  an  instruction  for  that  purpose. 
Garosche  v.  St.  Vincent's  College,  76  Mo.  3S2; 
Stanard  Milling  Co.  v.  White  Line  Cent.  Ti-an- 
sit  Co.,  122  Mo.  273,  26  S.  W.  704.  The  judg- 
msat  is  affirmed. 

BARCLAY,  C.  J.,  and  GANTT,  SHER- 
WOOD, BURGESS,  and  BRACE,  JJ.,  Concur. 
ROBINSON,  J.,  dissents. 


MOJiTGAOE  NOTE— ASSIGNEE— EQUITIES. 


31 


BUEHLER  V.  McCORMICK. 

(48  N.  E.  287,  169  111.  269.) 

Supreme  Court  of  Illinois.     Nov.  8,  1897, 

Appeal  from  appellate  court,  First  district. 

Bill  by  John  AV.  Buehler  against  Tilton  H. 
McCormick  to  foreclose  as  a  mortgage  a  deed 
of  trust.  From  a  judgment  of  the  appellate 
court  (67  111.  App.  73)  reversing  a  decree  in 
favor  of  complainant,  complainant  appeals. 
Affirmed. 

Goldzier  &  Rodgers,  for  appellant.  New- 
man, Northrup  &  Levinson  (Elmer  E.  .Tackson, 
of  counsel),  for  appellee. 

CARTER,  J.  The  circuit  couit  of  Cook 
county  entered  a  decree  in  favor  of  the  com- 
plainant to  the  bill,  John  W.  Buehler,  foreclos- 
ing as  a  mortgage  a  deed  of  trust  given  by  the 
defendant,  Tilton  M.  McCormick,  upon  real 
estate.  The  appellate  court  for  the  Firet  dis- 
trict has  reversed  that  decree,  and  dismissed 
the  bill.  The  case  is  here  on  Buehler's  appeal. 
The  facts  are  these:  McCormick,  being  in- 
debted to  William  Haerther  for  the  purchase 
of  the  real  estate,  on  March  27,  1893,  executed 
his  note  for  $820.  payable^  to  his  own  order, 
one  year  after  its  date,  indorsed  it  in  blank, 
and  delivered  it  to  Haerther.  To  secure  its 
payment,  he  also  executed  his  deed  of  trust 
upon  the  property  to  one  Austin  as  trustee,  and 
delivered  the  same  also  to  Haerther.  Before 
the  note  was  due,  and  only  about  a  month 
after  given,  McCormick  paid  Haerther  $;W0, 
and  Haerther  credited  it  on  the  back  of  the 
note.  About  three  weeks  later  he  made  an- 
other payment  of  $100  on  the  note,  for  wliich 
Haerther  gave  him  a  receipt;  and  a  few  days 
later,  by  agreement  with  Haerther,  he  deliv- 
ered to  him  (Haerther)  a  certificate  of  deposit 
of  the  Milwaukee  Avenue  State  Bank  for  $515 
in  full  payment  of  the  balance  of  tne  note, 
principal  and  Interest.  McCormick  did  not, 
when  he  made  the  last  payiru^ir  fake  up  the 
note  or  jeed  of  trust,  nor  did  he  ask  for  a  re- 
turn of  the  same  to  him,  but  relied  ujjon  the 
trustee,  Austin,  who  had  a  desk  in  the  office 
of  Haerther,  to  release  the  deed  of  trust,  and 
to  return  the  same  and  the  note  to  him;  l)ut 
Austin  neglected  the  matter,  and  moved  out 
of  Haerther's  office,  whereupon  McCormick 
sorght  Haerther,  and  endeavored  to  obtain 
his  note  and  deed  of  trust.  Whether  Haerther 
avoided  him  or  not,  he  was  unable  to  get  any 
satisfactory  response  until  in  the  latter  part  of 
September,  when  he  obtained  from  Haerther 
a  receipt  in  full  for  the  amount  of  the  note  and 
interest.  About  two  months  al'l-^r  the  note  was 
executed,  and  some  days  after  it  had  been 
fully  paid  in  the  manner  before  stated,  jjfipr- 
ther,  being  indebted  to  the  Garden  City  Banlc- 
"mg  &  Trust  Company,  of  which  appellant, 
Buehler,  was  the  casliier,  gave  the  bank  his 
note  therefor,  and  delivered,  among  others,  the 
note  in  question  to_the  bank  as  collateral  se- 
cui-itv.  Some  two  months  later,  about  July 
20,"l895,  the  bank  sold  the  note  in  conlrovorsy 


under  the  pledge,  and  appellant,  Buehler^ 
boi'ght  it  at  the  public  .«ale.  Before  TBe  saTe^ 
notice  was  .'served  upon  the  bank  that  the 
note  had  been  paid  in  full,  and  demand  was 
made  for  the  surrender  of  the  note  and  deed 
of  trust.  Appellant  contends  that  It  does  not 
appear  that  llaorther  held  the  nofe  when  it 
was  paid,  but,  as  it  was  indorsed  and  dcliv- 
ered  to  him  by  McCormick  in  payuiout  for  tlie 
property  purchased  of  him,  and  he  did  not 
transfer  it  to  the  bank  until  after  It  was  paid, 
and  there  being  no  evidence  that  any  one  cl.se 
held  the  note  in  the  meantime.  It  nmst  be 
presumed  that  he  was  the  legal  ho'.der  of  It. 

It  is  not  contended  that  appellant  acquired 
any  rights,   as  against  appellee,  superior  to 
those  possessed  by  the  bank  before  It  sold 
and  delivered  tlie  note  to  him  (Huelilcr).     But 
counsel  for  appellant,  while  recognizing  the 
common-law    rule,    as   appli«'d   and   followed 
by  this  court  in  Olds  v.  Cimimings,  31  111.  188, 
and  many  subsetiuent  cases  down  to  McAu- 
liffe  V.  Renter,  166  111.  491,  46  N.  E.  1087.  that 
the  as.signee  of  a__mQrtg;ige  takea  it.aubjecl;_ 
to  all  equities  existing  between  the  assignor 
and  the  mortgagor,  insist  that  the  rule  can- 
not be  applied  in  this  ease;    to  use  their  lan- 
guage:    "(1)  Because,   by   the   tenor  of   the 
instruments,    the    maker    is    estoi»ped    from 
availing    himself    of    such    equities;    (2)  be- 
c-ause  no  assignment,  equitable  or  otherwise, 
of  the  mortgage  In  question  is  involved;  (3) 
because  the  negligence  of  appellee,  which  en- 
abled the  perpetration  of  a  fraud  ui>on  appel- 
lant, deprives  him  of  the  right  to  urge  his 
equities  as  against  appellant."     And  in  this 
connection  it  is  urged  that,  as  the  note  jyaa. 
made  payable  to  the  order  o^  the  maker,  and 
Indorsed  by  him  in  blank,  lirid  delivered  to 
Haerlh^i*,  It  tliereiiTTer  passed  by  mere  deliv- 
ery, the  s{ime~as^"irif  TTad  been  made  i>ay- 
i  Tile  to  bearer,  and  that  the  trust  deed  recites 
i   that  the  maker  "is  justly  indebte<l  unto  the 
legal  holder  of  the  prin(ii>al  promissory  note 
i   hereinafter  described  in  the  principal  sum  of 
I  $820,  being  part  of  the  purchase  money  for 
I   the  premises  thereby  conveyed,"  etc.,  and  de- 
scribing the  note;    and  the  point  is  made  that 
In   such   a  case   the  equities  of  the   maker 
against  an   innocent  holder  cannot  prevail, 
even  although  the  instrument  is  not  assign- 
able, either  at  common  law  or   by   statute. 
It  is,   of  course,   apparent  that    McCormick 
1   -yvould  ba^e  had  a  complete  defense  to  any 
suit  which  Iljierther  might  have  brought,  ei- 
ther upon  the  note  or  to  foreclose  the  mort- 
gage.    It  is  also  apparent  that.  ^s_jthe  note 
passed  from  Haerther  to  the  bank  before  its 
maturity,    and    without    notice    that    It   had 
been  paid,  the  bank  could  recover  from  the 
maker  the  amount  ai)i)earing  to  be  unpaid 
and  due  upon  it  in  an  action  on  the  note.    It 
is  clear,  also,  that,  unless  the  mortgagor  has 
estopped   himself,   or   the  case   falls   within 
some  of  the  exceptions  which  have  been  cre- 
ated to  the  general  rule  that  the  assignee  of 
a   mortgage   takes  it  subjei^'t   to  all  of   the 
equities  existing  between  the  mortgagor  and 


32 


MORTGAGE  NOTE-  ASSIGNEE-EQUITIES. 


mortgagee,  the  defense  that  McCormick  paid 
the  debt  in  full  to  the  legal  holder  of  the 
note,  even  before  its  maturity,  must  be  held 
a  valid  one.  The  point  made  by  appellant 
that  Haerther  was  not  mentioned  either  in 
the  note  or  mortgage  we  regard  as  immate- 
rial under  the  facts.  See  Shippen  v.  Whit- 
tier.  117  111.  282,  7  N.  E.  »U2;  McAuliffe  v. 
Ileuter.  supra.  When  McCormick  indorsed 
the  note  in  blank,  which  he  had  made  pay- 
able to  himself,  and  delivt-rcd  it.  with  the 
deed  of  trust,  to  Haerther.  Haerther  became 
the  legal  holder,  and  both  instruments  were, 
of  course,  while  in  his  hands,  subject  to  the 
defense  of  payment:  but,  as  the  note  passed 
by  delivery  as  if  payable  to  bearer,  the  bank 
took  it  heioTB  its  maturity,  free  from  the  de- 
fense of  payment.  He  was,  in  fact,  an  as- 
signee of  the  note,  and  by  virtue  of  that 
fact  an  assignee  of  Jhe  mortgage  also, 
though.  as~To  the  mortgage,  only  an  equita- 
bl«?jissigne.e.  1  Rand.  Com.  Taper,  pp.  'ZM, 
243;  1  Daniel,  Neg.  Inst.  729.  Because  the 
mortgage  secured  the  payment  of  the  note  to 
the  legal  holder,  instead  of  the  payee  by 
name,  cannot,  uixiu  any  legal  principle 
which  we  are  aware  of.  make  any  difference. 
It  was  no  more  a  contract  with  successive 
legal  holders  taking  by  mere  delivery  than 
it  would  have  been  in  the  other  case  with 
successive  indorsees.  -  In  both  cases  the  note 
secured  would  be  negotiable,  and  would  pass 
free  from  all  equities  between  the  parties; 
but  the  legal  and  equitable  character  of  the 
mortgage  remained  the  same.  and.  when  the 
mortgagor  paid  the  deed  to  Haerther,  who 
was  the  legal  holder  of  the  note,  the  effect 
was  the  same  as  it  would  have  been  if  Haer- 
ther had  been  named  as  payee.  We  cannot 
hold  that  by  the  terms  of  the  instrument  all 
the  attributes  of  negotiable  paper  were  im- 
parted to  this  deed  of  trust.  Xor  does  the 
ease  fall  within  the  principles  announced  in 
either  of  the  cases  cited.— Railroad  Co.  v. 
Thompson,  103  111.  1S7,  or  Miller  v.  Larned, 
Id.  5t;2.  In  the  former  case  this  court  held 
that  the  rule  applied  in  Olds  v.  Cummings  did 
not  apply,  and,  among  other  things,  said: 
"In  the  case  of  an  ordinary  mortgage  or  deed 
of  trust  to  secure  a  temporary  loan  from  one 
individual  to  another,  the  note  or  evidence 
of  the  indebtedness  taken  at  the  time,  al- 
though it  may  be  negotiable,  is  not  given  for 
the  express  puri>ose  of  being  put  uix)n  the 
market,  and  used  as  a  permanent  investment 
of  capital,  as  in  the  case  of  railroad  securi- 
ties; nor  does  the  mortgagee  in  such  ease, 
as  a  general  rule,  rely  wholly  on  the  security 
which  the  mortgage  aflurOs,  as  is  always 
doue  in  the  case  of  railroad  mortgage  bonds." 
In  the  Miller-Larned  Case  it  was  held  that 
it  did  not  apply  where  the  mortgage  was 
given  to  secure  the  payment  of  accommoda- 
tion paper,  for  the  reason  that  the  very  pur- 
pose for  which  such  paper  is  given  is  that  it 
may  be  assigned;  and,  as  it  is  without  con- 
sideration, it  cannot  be  enforced  at  all  be- 


tween the  original  parties,  and  the  applioa 
tion  of  the  rule  in  Olds  v.  Cummings  would 
defeat  the  security,  and  render  it  nugatory 
in  every  such  ease.  It  is  plain  that  the  case 
at  bar  does  not  fall  within  the  principle  of 
either  of  those  cases. 

Nor  does  any  ground  appear  upon  which  to- 
base  the  alleged  estoppel  against  McCor- 
mick contended  for  by  appellant.  It  is  said 
that  by  McCormick's  negligence  in  not  taking 
up  the  note  when  he  paid  it  he  put  it  in  the 
power  of  Haerther  to  perpetrate  a  fraud  on 
an  innocent  party.  But  this  is  not  a  suit 
upon  the  note,  but  upon  the  deed  of  trust  to 
foreclose  it  in  equity.  And  it  was  held  in 
Olds  V.  Cummings  that  it  was  the  dut>'  of  the 
purchaser  to  inquire  of  the  mortgagor  if  any 
reason  exists  why  it  should  not  be  paid,  and 
in  Walker  v.  Dement.  42  111.  280.  it  said:  "To 
be  protected,  the  assignee  must  omit  no  duty, 
nor  fail  to  exercise  every  precaution,  which 
prudence  demands  of  all  men  when  acting  in 
reference  to  matters  of  moment."  He  knows_ 
from  the  papers  who  the  mortgagor  is,  and 
£ay,  by  notice  and  inquiry,  ^protect  himself 
in  making  the  purchase  much  more  readily 
than  the  mortgagor  may,  if,  for  any  reason, 
fie  is  unable  to  obtain  at  once  the  cancellation 
and  return  of  his  obligations.  The  assignee 
is  charged  with  knowledge  of  the  law  that  a 
'mortgage  is  assignable  only  in  equity,  and 
subject  to  the  equities  between  the  original 
parties  to  it,  and  he  cannot  relieve  himself 
from  the  consequences  of  his  own  negligence 
by  simply  showing  that  the  mortgagor  failed 
to  take  up  the  note  and  mortgage  when  he 
paid  the  debt  to  the  then  legal  holder.  The 
case  diffei*s  in  several  material  respects  from 
Keohane  v.  Smith.  97  111.  loG,  which  made  no 
reference  to  Olds  v.  Cummings  and  subse- 
quent cases.  In  the  Keohane  Case,  while 
the  release  was  obtained  from  the  mort- 
gagee, yet,  when  the  debt  secured  was  paid 
to  him,  he  was  not  the  holder  of  the  note,  but 
had  assigned  it  to  the  true  owner  for  whom 
he  loaned  the  money,  and  when  it  was  paid 
to  him  he  had  no  authority  to  receive  it. 
Thus  it  was  said  by  Mr.  .Justice  Dickey  in 
his  separate  opinion  in  Ogle  v.  Turpin,  102 
111.  l."o,  that:  "Where  it  is  the  duty  of  any 
one  to  see  that  comill"GT(?!al  paper  is  paid,  a 
payment  to  the  payee  not  in  possession  of  the 
paper  will  not  affect  the  assignee.  That  was 
the  case  in  Keohane  v.  Smith,  and  on  that 
point  that  case  turned."  Neither  was  such 
payment  in  pursuance  of  any  original  con- 
tract entered  into  when  the  loan  was  made, 
as  in  McAuliffe  v.  Renter,  supra.  See,  also. 
Towner  v.  McClelland.  110  111.  542.  It  is  ap- 
parent that  all  that  has  been  said  in  the  dif- 
lerent  cases  cannot  be  fully  reconciled,  but  it 
is  clear,  we  think,  that  the  case  at  bar  falls 
within  the  general  principle  announced  by 
tills  court  in  Olds  v.  Cummings,  and  in  a 
long  line  of  cases  .since  that  case  was  decid- 
ed. The  judgment  of  the  appellate  court 
must  be  altirmed.     Judgment  affirmed. 


Cll  ECKS— ACCEPT  A  XCE— IX  DO  U.SEME  N  T. 


aa 


COMMEUCIAL  NAT.  I5AXK  OF  CHICAGO 
I-  Mi!»COLX  FUEL  CO, 

(67  111.  Api).  166.) 
Appellate  Court  of  Illinois.     Nov.  30,  1896. 
Sleeper,  McConlicr  A:  Rarbour,  for  appellant. 
Spencer  Ward,  for  appellee. 

SHEPAKD,  P.  J.  This  is  an  appeal  from  a 
.judgment  of  the  superior  court,  rendered  there 
upon  an  appeal  from  a  similar  Jud^rment  bo- 
tore  a  justice  of  the  peace. 

One  II.  L.  Cogjjer  drew  his  check  upon  the 
appellant  for  .$6;'>.2r),  payable  "to  the  order  of 
appellee,  in  settlement  of  an  account,  aiid  de- 
livered the  same  to  the  firm  of  Allan  F.  (jor- 
don  &  Co.,  who,  then  and  before,  acted  as 
ayentsoX  appellee  in  the  sale  of  coal,  and  as  to 
certain  customers,  not  includins  Cooper,  in 
making  collections  for  coal  sold  by  them. 

Having  received  the  check  in  question,  Gor- 
don &  Co.  indorsed  the  same  by  the  name  of 
"appellee,  "Per  Allan  F.  Gordon  &  Co.,  Agts.," 
and  deposited  it  to  the  credit  of  their  own  ac- 
count in  the  Oakland  National  Bank,  and  the 
same  wa.s  duly  paid  by  the  drawt-e,  the  appel- 
lant, in  the  regular  course  of  business  through 
the  clearing  house. 

Gordon  &  Co.  subsequently  became  insolvent, 
and,  upon  demand  made  upon  (Jooper,  by  ap- 
pellee, for  payment  of  the  account  for  which 
the  check  had  been  delivered  to  Gordon  &  Co., 
Cooper  produced  the  said  cliec-k  as  an  acquit- 
tance. 

Such  indorsement  being  claimed  by  the  ap- 
pellee to  be  unauthorized,  this  suit  was  brought 
to  recover  from  the  drawee  bank  as  tliough  the 
check  had  never  been  paid. 

It  is  urged  that  it  was  error  to  allow  an 
affidavit  denying  the  execution  of  the  indorse- 
ment to  be  filed  by  the  appellee  after  the  evi- 
dence was  closed. 

We  regard  the  point  as  being  more  technical 
than  meritorious.  So  far  as  the  record  dis- 
closes, no  objection  on  that  score,  to  the  evi- 
dence that  had  boon  adduced  on  the  question 
of  the  indorsement  being  unauthorized,  was 
made  until  the  evidence  on  both  sides  was  clos- 
ed, and  was  then,  for  the  first  time,  urgc^l  as 
an  objection  to  a  finding  in  favor  of  llie  ap- 
pellee as  plaintiff. 

So  soon  as  the  objection  was  made,  the  court 
gave  leave  to  the  appellant,  as  defendant,  to 
tile  the  affidavit,  which  was,  we  think,  in  apt 
time. 

The  further  objection  that  the  justice  of  tlie 

lieace  had  no  right  to  enter  judgment  for  the 

plaintiff  for  want  of  an  affidavit  denying  the 

<'xecution   of   the   indorsement,   and   that   the 

BARR.B.&  N.— 3 


superior  court  could  not  remedy  an  omlssdoii 
of  that  kind  before  the  jastice,  is  frivolous, 
and.  if  it  were  not,  the  jioint  not  being  iu;ulf 
in  the  sujterior  coui't  could  not  be  made  here 
for  the  first  time. 

It  is  next  contended  that  there  Is  no  evidence 
tliat  at  the  time  the  check  was  jiresentcd  to  ap- 
ju'llant  by  the  apix'llee  for  payment  there  were 
funds  to  the  cretlit  of  the  drawer  sufficient  to 
liay  the  check. 

It  being  made  to  appear  that  the  bank  paid 
the  check  upon  its  presentment,  after  the  un- 
authorized indorsement  by  (Jordon  &  Co.,  and 
charged  the  amount  to  the  account  of  the 
drawer,  who  Uieu  had  sufficient  fim<ls  on  de- 
posit to  meet  it,  and  who  afterwards  lift»Hl  the- 
clieck  in  settlement  with  the  bank,  constituted 
sufficient  proof  of  an  acceptance  of  the  check 
bj-  the  bank,  in  this  suit  brought  by  the  payee 
against  the  bank.  .Tackson  v.  Bank.  92  Tenn. 
l.")4,  L'O  S.  W.  S(r_'. 

It  is  further  argued  Uiat  Gordon  &  Co.  had 
authority  to  indoi-se  tlie  check  and  collect  it. 
It  might  well  be  that,  if  (Jordon  &  Co.  had  au- 
tiioritj-  to  make  collections  for  coal  they  had 
sold  for  appellee,  it  would  be  immaterial 
whether  they  had  express  authority  to  indorse 
checks  received  by  them  in  the  course  of  nmk- 
ing  such  colkvtions;  the  payment  to  them  of 
the  check  amomiiing,  in  such  ca.se,  to  a  collec- 
tion which  they  hail  aulliority  to  make,  and  iJie 
metho<l  or  means  of  making  such  collccijon  be- 
ing something  which  tlieir  principal  could  not 
escape  the  effect  of. 

But  the  mere  fact  that  Goi-don  &  Co.  had  pos- 
session of  the  check  atVords  no  presiunption  of 
tlieir  authority  to  indorse  it,  nor  would  mere 
authority  possessed  by  (iordou  &  Co.  t^_acce2t 
ijiccks  from  customers  of  appelUH*  for  coal  sold 
give  to  them  either  express  oriniplied  author- 
ity  to  indoive  such  t-liecks  by  the  name  of  ap- 
jtellee.  And  if  the  drawtn.'  of  such  a  check 
p.iys  the  same  upon  jui  Indorsement  that  is  not 
genuine,  or  is  not  aiUhoriz(xl.  it  does  so,  at_lte 
peril,  and  the  burden  of  showing  the  authority 
of  the  stranger  to  the  check  to  indorse  the 
same  for  the  payee,  wotdd  be  upon  the  drawee, 
if  it  would  es«ape  liability  to  pay  It  over  again 
to  the  payee.     .Tjft'kson  v.  }>ank.  supra. 

Whether  there  was  any  express  authority  tt** 
Gordon  &  Co.  to  indorse  and  collect  checks  de- 
hvered  to  them,  but  made  itayable  to  the  ap- 
l»ellee,  or  whether  from  the  course  of  dealing 
between  apjicllee  and  Gordon  &  Co.  such  au- 
thority iniglit  be  implied,  were  questions  whicli 
the  superior  court  decided  after  full  hearing; 
and  consideration,  and  we  do  not  feel  justilied' 
in  overturning  the  conclusion  there  reached,, 
but  must  affirm  the  judgment 


:i4 


CERTIFYING  BANK  CiLECKS-RIGHTS  AND  LIABILITIES. 


METROPOLITAN  NAT.  BANK  v.  JONES 
■ ;  -        et  al.  ~~ — ' 

(27  N.  E.  oS.*?.   laililk-^iJ 
Supreme  Court  of  Illinois.     May   lo,    ^g91. 
Appeal   from  nppellnte  court,  first   (lis- 
tri<t. 

Huniline.  Scott  <f  Lord,  for  appellant. 
Jiuiiyaa  tft  Ruii.ran,  for  appellees. 

MAII^KY.  .T.  This  was  n  suit  in  tissninp- 
sit.  broiiKht  by  the  Metropolitan  Naticinal 
Bank  of  t'hicaffo  ajrainst  Noble  .Jones, 
Hilward  S.  Jones,  and  Walter  Metcalf,  co- 
partnei*8  doins:  business  under  the  tirm 
name  of  Nolde  Jones,  to  recover  the 
amount  of  a  bank-check  for  $1..>10,  drawn 
by  the  defendants  on  the  Traders'  Bank 
of  Chicago,  payable  to  the  order  of  the 
plaintiff.  Tiie  defemlants  pleaded  noD  as- 
sumpsit, and  on  trial  before  the  court,  a 
jury  beinfj  waived,  the  issues  were  found 
for  the  defendants,  and  the  court,  after  tle- 
nying  the  jilaintiffs  ni(»tion  for  a  new 
trial,  gave  judgment  in  favor  of  the  de- 
fendants for  costs." 

The  facts  appear  by  stipulation,  and 
are,  in  substance,  as  follows:  On  the  1st 
day  of  October,  Jvsx.  after  the  coninience- 
ment  of  banking  hours  in  the  niorniny  of 
that  day,  the  defendants,  being  indebted 
to  the  i)laintiff'  inTRe^um  of  $1..>4(J,  gave 
to  the  j)laintiff  their  check  on  the  Traders' 
Bank  omncagd.  as  foTlowsT 
TIcTvv.  S.  J  ones.  $1  .."40.00.  Wal  ter  Metcalf. 
"Noble  .Tones. 
"Chicago,  C(»ok  Co..  11!..  Oct.  1,  lKS8. 

"  Pay  to  the  order  of  Metrop.  Nat'l  Bank 
liffen  hundred  and  forty  dollars. 
"To  Traders'  Bank, 

"Chicago,  111. 
"No.  lS,12s.  )         NouLE  Jones 

On  the  same  day,  and  during  banking 
liours",  the  plaintiff  sent  said  cheek  by  one 
of  its  collectors  fo  the  Trach-is"  Bank,  and 
asked  said  bank  to  certif^v  it,  which  was 
«T«)ne  by  writing  across  the  face  of  it  as 
follows:  "Certified.  10,  1,  ISsH.  Traders' 
Bank  of  Chicago.  Chakt.es  G.  Fox.  "  The 
next  njorning.  during  banking  hours,  but 
before  clearing-house  hours,  the  plaintiff 
sent  said  che<;k  by  its  collector  to  the 
Traders'  Bank,  and  presented  it  for  and 
denianiled  ji^nynnjut,  which  was^refused 
TIkh  iMii'ii.  on  the  same  day.  aiid  during 
trniikiii-  iiours,  the  plaintiff  protested 
•said  check  for  non-i)ayn]erit.~and  sent  n<> 
tice  of  dishonor  to  thiLxlcfcudaiiU<r"On 
ni^  niorning  said  tTmTkvvas  presented  for 
payment,  an<l  l)efore  it  was  jiresented.and 
before  ciearing-honse  h«nirs,  the  Tra(jers' 
Bank  bK?ame  insolvent,  and  suspended 
payment,  and  its  assets  vvere  subsequently 
|>laced  in  the  liands  of  a  receiver,  wiio  has 
since  ha<l  possession  thereof.  Said  re- 
ceiver has  pjiid  the  creditors  of  said  bank 
dividefids  .it  <lifferent  times,  those  paid  to 
the  plaintiff  amounting  to  SCO:',,  leaving  a 
bsilnnee.  priiuipjd  and  interest.  <lue  on 
saifl  check  at  the  time  of  the  trial  of 
$'-Hi).70.  At  the  time  said  check  was 
drawn,  at  the  time  it  was  certified,  and 
at  the  time  payment  was  demanded,  the 
defenflants  had  sufficient  funtls  in  the 
Trailers'  Ilank  to  their  credit  to  pay  the 
■check.anfl.if  [>ayinent  had  iji-en  denuinded 
instead  of  certiffcatro'n.'said  bank  would 


have  paid  it.  Upon  these  facts  the  coun- 
"flW  lor  llie  jJiaintiH  submitted  to  the  court 
the  following  proposition,  to  be  held  as 
the  law  in  the  de<'i.sion  of  the  case,  which 
was  refu.sed :  "Tlie  court  holds,  as  a 
proposition  of  law.  that  when  the  holder 
of  a  check  drawn  upon  a  bank,  situated 
in  the  same  city  as  the  holder,  on  the  day 
of  its  issue  takes  said  check  to  said  bank 
and  asks  said  bank  to  certify  said  check, 
which  said  bank  certifies  by  marking  'Cer- 
tified' on  the  face  thereof,  and  the  day 
following,  during  bank  hours,  presents 
said  check  to  said  bank  for  payment,  and 
the  bank  refuses  payment  thereof,  having 
become  insolvent  and  jjassed  into  the 
hands  of  a  receiver  before  banking  hours 
of  saiil  day,  and  the  holder  of  said  check 
at  once,  "and  during  banking  hours  of 
said  day,  gives  notice  of  such  dishonor  to 
the  drawer  of  said  check,  said  certification 
does  not  release  the  drawer  of  said  check, 
although  at  the  time  of  the  making  and 
certification  of  said  check  the  dravVer  had 
sufficient  funds  to  his  credit  in  said  bank 
to  pay  the  same, and. if  payment  had  been 
demanded  by  the  holder  instead  of  certifi- 
cation, such  bank  could  not  have  refused 
to  pay  the  same." 

The  only  question  presented  by  this  ap- 
peal is  the  one  raised  by  the  foregoing 
pro[)osition,  viz.,  whether  the  plaintiff,  by 
obtaining  certification  of  said  check,  re- 
leased the  drawers.  A  check  being  paya- 
ble immediately  and  on  deinah  J",  the  hold- 
er can  only  present  it  for  paymentT  and 
~lhebank__can  fulfill  its^ duty  to  its  deposit- 
or diTTy^by  paying  the  amcjunt  demanded. 
In  other  words,  tiie  holder  has  no  right  to 
demand  from  tlie  bank  anything  but  pay- 
ment of  the  check,  and  the  bank  has  no 
right,  as  against  the  drawer,  to  do  any- 
thing else  but  pay  it.  It  fcdlows  that 
there  is  no  such  thing  as  "acceptance"  of 
checks,  in  the  ordinary  sense  of  the  term, 
for    "af-y^^pf;^nC?"    ordTn^iHlY  jni plies   that 

the  dra^wei:^ requests  the  drawee  to  pay 
the  amount  a_t  aJutur^day.and  thedraw- 
er  "accf'pts"  to  do  so.  tlu-reby  becoming 
the  [jrincipal  debtor,  and  the  drawer  be 
coming  his  suret  \ .  Daniel,  Neg.  Inst.  § 
1601.  ill  then,  the  lioldcj',  on  making  pre- 
sentment of  the  check,  instead  of  demand- 
ing and  receiving  payment,  has  the  check 
certified  and  letains  it  in  his  possession. 
Tie  enters  into  a  new:  and  express  contract: 
with  tlip  bnnk  ^ot  within  the  scope  of  the 
lefial  relntiorifiT*^  trip  pnrTif>i~n<ir  v\-irliin 
Tlie  presumed  intention  of  thedrawer.  By, 
certification,  the  bank  enters  into  an  ab- 
solute undertaking  to  pa^-  the  check  when 
presented  at  any  time  within  the  period 
prescribed  liy  the  statute  of  limitations. 
The  ti-uusaction,  as  between  the  holder 
and  the  banic,  issubstantitiliy  the  same,  in 
legal  effect,  as  tliougn  tne  holder  had  re- 
ceived pavment,  and  Tiad  _dei)osited  the 
fni^triey  with"  the  bank,  ancTreceived  a  cer- 
^tiTicateof  deposit  therefor.  Tiie  liability 
of  the  bank  aftt:r  ,-frtiHr>-^<^w>n  ,^  i.wi^- 
pendent  of  the  question  of  its  jiossession 
of  the  requisite  amount  of  funds  of  the 
drawer;  it  being,  by  the  act  of  certifica- 
tion, estopped  to  deny  the  possession  of 
jufTicient  lululs.  AntffTier  resuTt  of  tlie 
transaction  is  that  tiiti  bank  thereby  Us: 
comes  _eiLtjtle<l_ta,   and   if  its   business  is 


^ 


certifyi:ng  bank  checks— rights  and  liabilities. 


3.3 


properly  conducted  actually  does,  climiac 
the  amount  of  the  check  to  the  uccouutof 
tTTedrawer  at  the  time  of  the  certilication; 
finis  in  reality  appropriating  to  the  pay- 
ment of  tiie  check  the  necessary  amount  of 
the  money  on  deposit  to  the  credit  of  the 
drawer,  precisely  the  same  as  though  the 
check  were  paid.  As  between  the  bank 
and  drawer,  certification  has  the  same  ef- 
fect as  payment,  tlie  funds  representing 
the  amount  of  the  check  being  just  as  ef- 
fectually withdrawn  from  the  (-(mtrol  of 
the  drawer,  and  the  indebtedness  from 
th*^  bank  to  the  dei)ositor  created  by  the 
deposit  being  just  as  effectually  satisfied 
to  that  amount  in  one  case  as  in  the  oth- 
er. The  question  whether  this  change  in 
the  rights  and  relations  of  the  parties 
should  be  held  to  discharge  the  drawer 
from  further  liability  on  the  check  has 
not,  so  far  as  we  are  aware,  ever  been  be- 
fore this  court  for  decision,  but  the  great 
weight  of  authority,  as  found  in  the  decis- 
ions of  courts  of  other  jurisdictions  and  in 
the  ti-eatises  of  law-writers  of  the  great- 
est learning  and  ability,  is  in  favor  of  the 
conclusion  that  the  drawer  is  discharged. 
Mr.  Daniel,  in  the  section  of  his  treatise 
above  cited,  lays  it  down  as  the  rule  that 
the  liaflJi^-by-irtrtifyiug  liie  check,  becomes 
thji  principal  and  only  debtor:  that  "the 
lT()lder,  by  taking  a  certificate  of  the  check 
from  the  bank,  instead  of  requiring  pay- 
ment, discharges  the  drawer;  and  that 
the  check  then  circulates  as  the  rei)resent- 
ative  of  so  much  cash  in  bank  payable 
on  demand  to  the  holder.  The  (]U(>stion 
is  very  elaborately  and  learnedly  discussed 
in  1  Morse,  Bank.  (3d  Ed.)  §  414  et  seq., 
and  the  same  conclusi(jn  reached,  the  fol- 
lowing beinir  a  portion  of  the  reasoning 
there  adopted  :  *' The  drawer  cau  no  lon^- 
er  sue,  though  the  bank  should  finally  re^ 
ttrse  to  pay  the  check,  for  lie  Iras  original- 
ly'' OTdy  a  rigiit  to  demand  that  the  check 
shall  be  duly  paid  on  pi-escntnient,  and 
his  action  lies  for  the  damage  resulting  to 
him  or  to  Ills  credit  from  not  havini;  his 
debt  duly  discharged  in  th(>  mnniier  he  has 
led  Iiis  cr(Hlitor  to  suiti)<)se  would  be  sulli- 
cient.  But  if  the  holder  waives  his  right 
to  immediate  payment,  by  expressly  ask- 
ing for  or  even  by  accepting  the  offer  of  a 
certification  by  the  l)ank,  it  follows  that, 
sinc.»  his  act  ac(iuits  the  dcbc  due  him 
from  the  drawer,  the  dr-awer  can  there- 
after have  no  cause  or  basis  whatsoever 
on  which  to  sue.  The  matter  is  volun- 
tarily taken  out  of  his  iiands  by  the  other 
parties,  who  make  their  arrangements  to 
suit  their  own  convenience.  Even, if  the 
drawer  has  suggested  or  rc(i nested  the  ar- 
i^ngement,  the  assent  of  the  payee  and 
holder  must  be  rega'ded  as  at  his  sole 
rji^k.  He  is  not  t)bliged  to  take  the  l)ank's 
promise  in  place  of  the  drawer's  inde!)ted- 
ness.  The  promise  of  the  bank  on  the 
drawer's  account,  accepted  as  satisfac- 
tory by  the  creditor,  discharges  the  debt- 
or, and  at  the  same  time  (le|)rives  him  of 
all  further  concern  or  possil)le  i-ight  of  ac- 
tion in  the  premises."  See.  also.  Tied. 
Com.  I'aper,  §  4:)i>.  Tin's  question  was  be- 
fore the  court  of  appeals  of  New  York  in 
Mank  v.  Leach,  52  N'.  Y.  :!.")(!,  and  it  was 
there  held  that,  where  a  holtl<>i'  of  a  check 
jireseuts  it   and  i)rocures  it  tu  l)e  r-ertiiied 


by  the  bank  instead  of  being  paid,  such 
cei-tilication  is.  as  between  the  holder  and 
the  drawer,  a  payment,  and  discharges 
the  drawer  from  liat>ility.  In  discuHsing 
the  giounds  upf)n  which  their  decision  is 
based,  the  C(jurt  say  :  "When  the  dravvee 
accepts,  it  is  an  appropriation  of  the 
funds,  pro  t.iiito,  to  the  service  juul  use  of 
the  payeti  or  other  person  holding  the 
i)ill,  so  that  tlie  am(iunt  ceases  henceforth 
to  be  the  money  of  the  drawer.  an<l  be- 
comes that  of  the  payee  or  other  liolder  in 
the  hands  of  the  acceptor.  It  is  entirely 
clear  that  the  acceptance  of  a  time  draft. 
beforejlije,  qii.es  not  operate  as  a  payment 
as^rpsx)ects_llltj3r'»^VJ.'ll.  Jts_  u:''.v  effect  ijj 
to"  make  the  acceptor  the  iirimary  part>' 
to'  pay  the  draft.  But  the  jtarties  to  a 
certified  check,  due  when  certified,  occupy 
a  different  position.  There  the  money  is 
due  and  iiayable  when  the  check  is  certi 
lied.  The  bank  virtually  says  that  the 
check  is  good.  '  We  have  the  money  of 
the  drawer  here  ri-ady  to  pay  it.  We  will 
pay  it  now,  if  you  will  receive  it.'  The 
holder  says:  'No;  1  will'not  take  the  mon- 
ey. You  may  certify  the  check,  and  re- 
tain the  money  for  me  until  this  check  is 
presented."  The  law  will  not  permit  ;• 
check  when  due  to  be  thus  presented.  an<i 
the  money  to  be  left  with  the  t)ank  for  the 
accommodation  of  the  holder,  without 
discharging  thedrawei-.  The  money  being 
due,  and  the  check  i)resented,  it  is  his  own 
fault  if  the  holder  declines  to  receive  the 
pay,  an<l  for  his  own  convenience  has  the 
money  ai)pro|iriated  to  that  check,  sub- 
ject to  its  future  presentment  at  any  time 
within  the  statute  of  limitations."  See. 
also,  lOssex  County  Nat.  Bank  v.  Uank  of 
Montreal.  7  Miss.  I'.Cj.i  It  seems  to  us  very 
clear,  both  upon  [)rinciple  and  authority, 
that  the  |>laintiff  in  this  case,  by  olitaining 
certilication  of  their  check,  discharged  the 
defendants  from  all  lialiility  thereon  as 
drawers, and  that  tlit' subseiiuent  present- 
ment of  the  check  for  payment,  though  on 
the  next  business  day  after  the  check  was 
issiKMl,  did  not  revive  or  in  any  manner 
affect  the  defendants'  liability. 

Hut  it  is  said  that  a  different  rulewaslaid 
down  bv  this  court  in  Bickford  v.  P>auk. 
42II1.  J:is.  Hounds  v.  Smith.  Id.  '-M.". ;  and 
Brown  v.  Leckie.  4:!  111.  4!tT.  It  will  lie 
found,  on  examination,  that  in  each  of 
those  cases  certilication  of  the  check  was 
obtained  by  the  drawer  before  delivery  to 
the  payee,  and  that  no  presentment  was 
made  ity  the  hohler  until  made  in  due 
course  foi'  payment.  It  is  easy  to  see  that 
an  essentially  »lift»'i-ent  rule  siiould  apply 
in  a  case  of  that  kind.  The  factthatXlu; 
drawer,  before  delivering  the  clici  U,  gets 
nVe  bank  to  certify  it,  in__M^i>  w 
its  essenUal  nature  a.s"li  ch( 
ffiytn'/nver's  linTTility  in  case,  on  (inc  pres- 
entation Tor  payment,  the  |)aper  is  dis- 
honoied.  The  reasoning  of  the  opinion  in 
the  above-mentioned  cases  slionid  be  re- 
stricted in  its  application  to  the  facts  ap- 
peai-ing  in  those  cases,  and.  as  ai)plied  to 
those  facts,  it  is  doul»tless  correct,  and 
should  be  follow  e<l.  Hut  it  cannot,  and, 
as  we  may  assume,  was  not  intended,  to 
apply  to  cases  like   the  present,  wliere  the 

1  Fe.i.   Cms.    .\u.  4..">:'.2. 


36 


CERTIFYING  BANK  CHECKS— EIGHTS  AND  LIABILITIES. 


liolder  lias  liimself  made  preseutinent  of 
the  check,  and.  instead  of  receiving  pay- 
ment, as  ho  niijxht  and  should  have  done, 
has  chcisen  rather  to  acce|)t.  in  lieu  of  pay- 
ment, an  express  executory  af?i*''t'ini?nt  by 
the  banl<  to  |)ay  the  cliecl<  to  the  hohler 
when  itn-sented  for  payment  at  any  time 
ti)ereafter. 

Much  effort  is  made  by  counsel  to  show 
that,  to  be  consistent  with  the  doi.-trine 
establislied  by  the  case  of  Munn  v.  Burch, 
25  III.  ;r>.  anri  in  tiie  numerous  cases  in 
which  that  decision  lias  been  followed, 
wemust  hold  that  thedefendants  were  not 
released  from  liability  by  the  cei'tification 
of  the  check.  In  Munn  v  Burch  we  held, 
contrary  to  the  rule  recognized  in  many  of 
the  states,  that  a  depositor,  by  delivering 
to  another  his  check  on  hie  banker  for  val- 
ue, transfers  to  the  payee  of  the  check  and 
his  assigns  so  much  of  the  deposit  as  the 
check  calls  f()r,  and^  that  on  presentatioii 
of  the  check  fg^t  payment  the  banker  be- 
comes liable  to  theholder  forthat  amount, 
provided  the  drawer  has  on  dei)ositat  the 
time  a  sufficient  sum  aiiplicable  to  that 
purpose  to  paj'  the  check.  Accordingly. 
if  the  banker  refuses  to  pay  the  check  on 
presentment,  he  becomes  liable  to  an  ac- 
tion by  the  holder  to  recover  its  amount. 
It  follows  that  the  giving  of  the  check  be- 
comes, at  least  after  presentment,  an  as- 
signment to  the  holder  of  a  sutticient 
amount  of  the  deposit  to  pay  the  check, 
and  therefore  a  definite  ai)i)ropriation  of 
that  sum  to  its  payment  binding  upon 
all  the  parties  to  the  check.  The  argument 
sought  to  be  made,  if  we  understand  it,  is 
that  the  certification  of  the  check  is  a  no 
moreeffectual  approjiriation  of  the  fund  on 
•lejiosit  to  the  payment  of  the  check  than 
was  already  made  by  the  act  of  the  draw- 
er in  giving  the  check,  and  therefore  that 
one  of  the  chief  grounds  upon  which  the 
rule  adopted  in  other  states,  that'  certili 
cation  releases  the  drawer,  is  based,  fails 
or  is  inapplicable  here.  If  the  mere  fact  of 
such  appropriation,  however  made,  is  the 
test  by  which  to  determine  whether  the 
drawer  has  been  released  or  not,  there 
may  be  force  in  the  argument.  We  do  not 
understand,  however,  that  such  is  the 
case.  Some  of  the  authorities,  it  is  true, 
allude  to  and  dwell  upon  that  circum- 
stance as  pos.sessing  very  considerable 
significance,  but  we  do  not  understand 
that  any  of  them  make  it  the  test  or  basis 
of  the  rule.  The  rule  laid  down  in  Munn 
V.  Burch  is  based  upon  the  implied  agree- 
ment on  the  part  of  the  banker  to  pay 
out  the  money  deposited  to  the  holders 
of  the  depositor's  checks,  at  such  times 
and  in  such  sums  as  the  depositor  sees  fit. 


by  his  checks,  to  order,  and  such  agree- 
ment is  held  to  be  so  far  available  to  the 
holder  of  tliedepositor'scheitk  as  toenablc 
him.  after  thecheck  has  been  duly  presented 
for  i>aymentand  payment  refused,  to  bring 
suit  against  the  banker  in  his  own  name, 
and  i-ecover  the  amount  of  the  check.  The 
banker,  as  the  result  of  his  imi)lied  agree- 
ment, becomes  the  principal  debtor,  but 
the  draweris  still  liable,  at  least  as  surety, 
and  is  at  liberty  at  any  time,  by  paying 
and  taking  up  thecheck,  to  reinvest  himself 
with  the  legal  title  to  the  mone^' on  de- 
posit. Theappropriation  of  thefuud,  then, 
so  far  as  any  definite  appropriation  of  it 
can.  under  the  circumstances,  be  said  to  bi- 
made,  is  only  conditional,  and  follows  in 
strict  accordance  with  tlie  terms  of  the 
contract  betwaen  the  parties,  and  must 
be  reirarded  as  one  of  the  consequences 
contemplated  by  them  at  the  time  the 
check  was  drawn.  But  where  the  holder 
of  the  check,  on  presenting  it  to  the  bank- 
er, instead  of  demanding  and  receiving 
payment,  as  the  jiarties  contemplated  and 
as  is  his  legal  duty,  requests  and  obtains 
certification,  and  retains  the  check  in  his 
own  hands,  wholly  different  rights  are  ob- 
tained, and  consequently  different  rules  of 
law  are  ai)i)licable.  The  approjiriation 
of  the  deposit  to  the  payment  of  the  check 
then  becomes  absolute,  and  the  holder  en- 
ters into  new  contractual  relations  with 
the  banker,  not  contemplated  or  author- 
ized by  the  di'awer,  and  wlwch  i)lace  the 
fund  appropriated  wholly  beyon<l  his  con- 
trol and  out  of  his  reach.  Even  viewing  the 
dra  wer  as  surety ,  the  new  contract  l)etAV?en 
thecreditorand  the  principal  del)tor,  affect- 
ing asit  does  thecharacter  of  thedet)t  and 
thetinieand  maunerof  i)ayment, should  of 
itself  beheld,  uiion  well-settled  princiulesof 
law,  to  be  sufhcient  todischarge  his  liabil- 
ity as  surety.  But,  whether  tlu'  decisiofj 
of  the  case  should  be  placed  upon.  tlu.« 
ground  or  not.  the  oresentment  of  the 
check  forpMvment  and  its  dishonor  on  the 
one  hand,  and  its  presentment  and  certifi- 
cati(>n  on  the  other,  involve  legal  rights, 
and  invoke  the  aiiplication  of  legal  rules, 
so  es.sentially  different  that  the  doctrine 
of  theca.se  of  .Munn  v.  Burch.  which  is  con- 
trolling where  payment  is  demanded  and 
refused,  can  have  no  relevancy  to  or  con-. 
trolling  effect,  even  by  analojiy,  in  a  case 
where  the  holder  gets  thj  check  certifii-d. 
We  are  of  the  o])inion  that  no  error  was 
committed  in  refusing  to  hold  thQ  proposi- 
tion submitte«l  by  the  plaintiff  as  the  law 
in  the  decision  of  the  case,  and  that  the 
appellate  court  properly  affirmed  the  judg- 
ment. The  judgment  of  the  appellate 
court  will  accordingly  be  affirmed. 


WSBT   PUBlylBBINU  CO.,  PRINTKB8  AMI  KTKKKUTYPKKH,  BT.  PAUL,  MINN. 


LAW  UBRARY 

UMVERSITY  OF  CALIFORNU 

LOS  ANQBLflS 


►  pamphlet  BINDER 


Manjfoctured  by 

tGAYLORD  BROS.  IncrJ 

Syracuse,  NY. 

Stockton,  Calif. 


\     I 


^'(^^  4 


•« 


A- . 


^■r  ,.... 


fii; 


